State Bank of India vs Commissioner of Income Tax and Others

A.M. Sapre, J.—By filing this writ under Article 226/227 of the Constitution of India, the petitioner--a nationalized bank has sought quashing of a notice dt. 9th Dec., 1998 (Annex. P-15), issued by respondent No. 2-TRO to petitioner u/s 226(3) of the IT Act.

By impugned notice, the TRO in exercise of powers conferred u/s 226(3) of the IT Act has called upon the petitioner-bank to release a sum of Rs. 6,00,000 in favour of IT Department which they (bank) are holding with them on behalf of respondent No. 4 who is a defaulter in payment of Income Tax dues/arrears to the Department. Since the respondent No. 4 has not liquidated their Income Tax arrears, IT Department through their TRO has invoked his powers conferred u/s 226(3) of the Act and issued impugned notice to petitioner calling upon them to release the money lying with them amounting to Rs. 6,00,000.

It is not in dispute that the petitioner is having a current account of respondent No. 4 with them. It is also not in dispute that petitioner is not the creditor of respondent No. 4 and hence, petitioner is under legal obligation to ensure compliance of notice issued by the IT Department u/s 226(3) of the Act for recovery of Income Tax arrears of respondent No. 4, i.e., defaulting assessee and hence, release the payment demanded in favour of IT Department. Indeed, that is the object and purport of Section 226(3) of the Act and hence, no sooner the notice is served upon the petitioner-bank they have to release the money forthwith in favour of Department.

The respondent No. 4 in this petition did not join any issue by contending that they are either not liable to pay or that they have paid and discharged the liability towards arrears of Income Tax mentioned in the impugned notice. In this view of the matter and in the light of these facts, the impugned notice has to be given effect to against the petitioner by ensuring release of the amount specified in the notice in favour of IT Department,

Petition is thus found to be. devoid of any merit. It is accordingly, dismissed. As a consequence, the interim order is vacated. No costs.