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2010 (3) TMI 836 - ALLAHABAD HIGH COURTSearch and seizure under section 132 of the Income-tax Act - block assessment under section 158BC of the Act - bank guarantee - recovery of tax - default - attachment of property - held that:- Default would arise only when there is a demand. Admittedly, on November 18/21, 2005, the assessee was not in default or deemed default of any tax due. Thus, no order or direction could have been given for such payment to the bank. - section 226(3) of the Act is not attracted Regarding attachment u/s 281B - held that:- The language of the above provision is plain and simple. It provides for the attachment of the property of the assessee only and of no one else. The golden rule of interpretation of statutes is that the statute has to be construed according to its plain, literal and grammatical meaning unless its leads to absurdity. The fixed deposits of the petitioners not being the property of the assessee as such were not open to attachment. Action of the bank - held that:- the attachment was illegal and does not have the effect of authorising payment ; and had lapsed on the expiry of six months from the date of attachment. Thus, the action of the bank in releasing the amount under the fixed deposits was patently illegal and in clear violation of the terms and conditions of the contract of the bank guarantee. While allowing writ petition, bank directed to refund the petitioners the amount of their fixed deposits which were encashed on November 1, 2006, within a period of one month with simple interest at 8 per cent. per annum, with effect from November 1, 2006, till the date of refund. - bank at liberty to claim the amount with interest from the department.
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