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TMI Blog2003 (4) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... bankers that respondent No. 1 had issued purported notices under section 226(3) of the Act asking the various banks to pay money deposited in the petitioner's account to the said respondent pursuant to the demand against the petitioner. The petitioner challenged those notices before this court under article 226 of the Constitution of India and Dilip Kumar Seth J., by order dated May 10, 2002, quashed those garnishee notices and directed the respondents to repay the amount debited from the petitioner's account. In the meantime, an order dated December 9, 2000, passed by the Commissioner of Income-tax (Appeals) Central-I, Kolkata, in Appeal No. 360/CC-III/ CIT(A), C-I of 2001-2002, preferred by the petitioner against the block assessments, partly went against him. Being dissatisfied, the petitioner preferred an appeal on December 24, 2002, before the Income-tax Appellate Tribunal and the said appeal is pending. On December 19, 2002, the petitioner received a letter issued by respondent No. 1 dated December 17, 2002, demanding purported arrears of Rs. 2,25,47,840 within 15 days from the receipt of such letter. Immediately after receiving the letter, the petitioner wrote to responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application is not disposed of by the appellate authority. The other point put forward by Mr. Bhattacherjee is that without serving a notice under section 226(3)(iii) of the Income-tax Act upon the assessee, the income-tax authority cannot recover any amount by taking aid of section 226(3) of the-Income-tax Act. Mr. Bhattacherjee contends that in this case till date, the petitioner has not been served with any notice as required under section 226(3)(iii) of the Act so far as the collection of the amount from the State Bank of India is concerned. Under such circumstances, the petitioner prays for a direction upon respondent No. 1 to redeposit the amount collected from the State Bank of India and to stay recovery proceeding so long as the stay application is not disposed of by the Income-tax Appellate Tribunal. In support of the first contention, Mr. Bhattacherjee has relied upon the following decisions of different courts: (1) Bongaigaon Refinery and Petro Chemicals Ltd. v. CIT [2002] 256 ITR 698 (Gauhati); (2) Mohan Singh v. CIT [1993] 204 ITR 571 (P&H) (3) K.T. Building Materials Pvt. Ltd. v. Commissioner (A), Central Excise and Customs [1997] 94 ELT 59 (Raj); (4) Dwarka Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal under section 246 of the Act. The aforesaid provision manifests the intention of the Legislature that the fact of mere filing of an appeal does not constitute stay of the demand. As pointed out by the Supreme Court in the case of ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815, although the Act is silent, section 254 of the Act impliedly grants the authority to the Appellate Tribunal to make necessary order staying recovery proceeding. But the apex court hastened to add that such power should not be exercised in a routine way or as a matter of course in view of the special nature of taxation and revenue law. It will only be when a strong prima fade case is made out that the Tribunal will consider whether to stay recovery proceedings and on what conditions and the stay should be granted in most deserving and appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal. Therefore, so long as the appellate authority does not pass any specific order granting stay of recovery during the pendency of an appeal, there is no bar to proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven during the pendency of an application for stay. The case of K.T. Building Materials Pvt. Ltd. v. Commissioner (A), Central Excise and Customs [1997] 94 ELT 59 (Raj) was one where during the pendency of stay application before the appellate forum, coercive process was employed for recovery of the amount. The Division Bench disposed of the writ application by directing the appellate authority to dispose of the stay application within two months with further observation that if in the meantime the amount has already been recovered, then the appeal itself should be disposed of within two months. In the case of Dwarka Minerals and Chemicals (P.) Ltd. v. CCE(A) [1997] 93 ELT 330, a Division Bench of the Punjab and Haryana High Court was of the view that if the appellate authority does not pass an appropriate order on the request made by the appellant for stay and at the same time does not even hear out the appeal, a writ court will be justified in concluding that the remedy of appeal was not effective. However, the Division Bench directed the appellate authority to dispose of the stay application within four weeks and stayed the recovery proceeding till the disposal of the applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money for or on account of the assessee jointly with any other person and for the purposes of this sub-section, the shares of the joint-holders in such account shall be presumed, until the contrary is proved, to be equal. (iii) A copy of the notice shall be forwarded to the assessee at his last address known to the Assessing Officer or Tax Recovery Officer, and in the case of a joint account to all the joint-holders at their last addresses known to the Assessing Officer or Tax Recovery Officer. (iv) Save as otherwise provided in this sub-section, every person to whom a notice is issued under this sub-section, shall be bound to comply with such notice, and, in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary for any pass book, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary. (v) Any claim respecting any property in relation to which, a notice under this sub-section has been issued arising after the date of the notice shall be void as against any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts is to "forward" a copy of the notice given to the person from whom money is payable to the assessee or who holds money on account of the assessee, to the assessee for his information. The assessee at this stage has no role to play except to be informed that the Assessing Officer has proceeded to recover the amount. Such notice is generally forwarded to the assessee after the issue of notice upon the debtors or bankers of the assessee lest he can escape the recovery, Therefore, I find no substance in the contention of Mr. Bhattacharya that for non-service of notice under section 226(3)(iv) of the Act the process of recovery under section 226(3) should be annulled. With great respect, I am unable to subscribe to the opinion expressed by the learned judge of the Punjab and Haryana High Court in the case of Mohan Singh [1993] 204 ITR 571. I thus find no substance in the contention of the petitioner that recovery of amount by giving notice under section 226(3) of the Act from the State Bank of India is vitiated in any way. I, however, direct the appellate authority to dispose of the appeal itself positively within a month from date if the entire amount has been realised. Otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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