TMI Blog1999 (8) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee, to pay to the AO or TRO either forthwith upon the money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that amount. (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 he 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." Reliance is placed on the decision given in the case of Hyderabad Co-operative Commercial Corporation Ltd. Etc. vs. Syed Mohiuddin Khadir (dead) by LRs AIR 1975 SC 2254 at para 13 as under : ".. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal in N. Joachimson (A Firm Name) vs. Swiss Bank Corporation (1921) 3 KB 110 to the effect that "The contract which a banker enters into with his customer is that the banker will receive on account of the customer any moneys paid into his account, the banker having liberty to use the money in his business, and will on demand by the customer pay to the customer or to his order at the bank during business hours any amount not exceeding the credit balance, and sometimes there is the additional term that the banker will pay interest on the balance due, and further, that the banker will not terminate the relation without giving the customer reasonable notice," are also relied upon. In Webb vs. Stenton Ors. Gamishers (1983) 11 QB 518 Brett, J. observed, at p. 523 thus "If there is not a debt payable in praesenti, but there is a debt in existence, debitum in praesenti, but payable in futuro, it seems to me that such an order could be made with regard to that debt, although it be the only debt and there is no debt payable in praesenti, because such third person is indebted to the judgment debtor, and that would satisfy the words of the rule. " In Stroud's Judicial Dictionary of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... most could attach them and that the order may continue till its maturity and on maturity the amount could be remitted to the IT Department. 6. On behalf of the respondents, Mr. Indra Kumar, relied on the decision given in the case of I. Devarajan Ors. vs. Tamil Nadu Farmers Service Co-operative Federation Ors. (1981) 51 Comp. Cas. 682 wherein it was observed that so far as the law relating to banking is concerned when a customer pays in on deposit, the money paid in cannot be considered as a fund held by the banker in trust for the customer. It is merely a loan to the banker and the customer is entitled to no more than the payment of an equivalent sum at the time which the agreement between the two parties specifies. Following the Halsbury's Law of England, 4th Edn. Vol. 3, p. 89, it was observed that "Even if a deposit is payable at a future date or after the lapse of a specified time it is liable to attachment and when the account is attached the whole amount is impounded irrespective of the sum recovered by the judgment unless the order otherwise directs. What is attached is the money in the deposit account. It being a debt due is of no significance as far as the law rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not in dispute that the assessee in default has deposited the money and obtained fixed deposit receipt from the petitioners' bank which was done with a view to earn interest and the date of maturity of that fixed deposit receipt is at a later date. Fixed deposits are normally payable after the expiry of the period specified in the receipts itself. The banker becomes a debtor of the assessee in default the moment fixed deposit receipt is obtained. Normally the payment of the fixed deposit receipt is made on the due dates. But on forgoing interest or paying lesser rate of interest the bankers generally permit customers to withdraw the amount of the fixed deposits before the maturity date. The fixed deposit receipt is not a negotiable instrument, but could be assigned with the concurrence of the bank in favour of other persons. Attachment of the amount in the fixed deposit could be made by the IT authorities under the proviso to s. 226(3) of the IT Act. 10. Power under s. 226 has been given to the ITO to recover in the modes provided the amount which is outstanding, Power under s. 226 could be exercised by one or more of the methods provided in the section and the certificate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t date and the assessee wants to get the fixed deposit encashed earlier than the date of maturity, it is considered permissible. Though the contract is entered by the assessee while obtaining the deposit receipt for receiving the money at a later date yet for the sake of reputation of the bank or for the facility of the assessee or otherwise, payment is made before maturity of the deposit receipt. The Department steps in the shoes of the assessee and can claim payment even before its maturity. Even the production of such receipt, deposit receipt is not required in terms of s. 226(3)(iv). 12. In these circumstances, the respondent has the jurisdiction to attach the fixed deposit and the bank is under obligation to make the payment of the amount even before the maturity of the fixed deposit receipt. It may be observed that according to the instructions which are issued by the Reserve Bank from time to time if a depositor wants to encash the fixed deposit receipt before its maturity, the bank is bound to refund the amount with lesser interest as is permissible looking to the time involved. The position of contracts entered into by an assessee with other companies or partners, where ..... X X X X Extracts X X X X X X X X Extracts X X X X
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