Satyabir Singh vs Commissioner of Income Tax and Others

G.S. Singhvi, J.—This is a petition for quashing of the provisional attachment order annexure P-8, dated October 28, 1998, issued by the Income Tax Officer, Ward No. 8, Faridabad (respondent No. 3), u/s 281B of the Income Tax Act, 1961 (for short, "the Act"), read with rules 20, 22 and 26 of the Second Schedule to the Act and also to direct the respondents to release the fixed deposits of the petitioner.

The facts of the case lie in a narrow compass. The agricultural land measuring 32 kanals 9 marlas belonging to the petitioner was acquired by the State Government vide notification dated May 6, 1996, issued u/s 6 of the Land Acquisition Act, 1894. In pursuance of the award dated April 30, 1998, passed by the Land Acquisition Collector, he was paid compensation amounting to Rs. 1,35,070 vide Cheque No. 0320852, dated May 8, 1998. For the purpose of availing of exemption from capital gains u/s 54B of the Act, the petitioner entered into various agreements for purchasing of agricultural land out of the compensation received by him. He filed returns for the assessment years 1997-98 and 1998-99 vide annexures P-16 and P-17. After about five months of receiving the amount of compensation, respondent No. 3 issued the impugned order of provisional attachment on the basis of the action initiated u/s 148 of the Act against another assessee, i.e. Tek Ram, Hindu undivided family.

The petitioner has challenged the impugned order on the ground that by initiating action against the assessee-Tek Ram, Hindu undivided family, respondent No. 3 did not acquire jurisdiction to attach his property u/s 281B of the Act simply because he is the son of Tek Ram and a part of the compensation received by Tek Ram, Hindu undivided family was deposited in the form of FDRs and in SB account in his name.

In the written statement filed on behalf of respondents, the attachment of the petitioner''s property has been justified by making the following assertions :

"6. It is true an order u/s 281B was passed by the Assessing Officer on October 28, 1998, against Tek Ram, Hindu undivided family. This order was passed with the prior approval of the competent authority and was in relation to the property belonging to the assessee. The assessee in this case was the Hindu undivided family and the property belonging to it would be in the names of its adult members. The petitioner was one such adult member of the said Hindu undivided family.

The Hindu undivided family had received an amount of Rs. 82,15,822 on July 23, 1996. This money was put in a hank in the names of the various adult members of the Hindu undivided family, the petitioner being one of them. Rs. 23,00,000 of the said amount of Rs. 82,15,822 was put in the name of the petitioner on the date itself, in the following way as per annexure R-1, attached.

Rs. 10,00,000 23-7-1996 F. D. No. J151, Union Bank of India. Jharsatly Rs. 10,00,000 23-7-1996 F. D. No. 503. Union Bank of India, Faridabad Rs. 3,00,000 23-7-1996 S. B. A/c. No. 60002, Union Bank of India, Jharsatly

Further Rs. 4,50,000 were put in the petitioner''s SB account No. 60002 in the Union Bank of India, Jharsatly, on April 24, 1997, via Kiran, his sister, in whose name Rs. 9,00,000 were put in F. D. No. J149 on July 23, 1996. Another Rs. 2,50,000 were put in the petitioner''s said SB account on February 14, 1998, via Phoolwati, his mother, in whose name Rs. 15,00,000 were put in F. D. No. J150 on July 23, 1996.

This way Rs. 30,00,000 of the Hindu undivided family money was put in the petitioner''s name by February 14, 1998, with the following break up:

23-7-1996 Rs. 10,00,000 F.D.No.J151 23-7-1996 Rs. 10,00,000 F. D. No. 503 23-7-1996 Rs. 3,00,000 S. B. A/c. No. 60002 24-4-1997 Rs. 4,50,000 S. B. A/c. No. 60002 14-2-1998 Rs. 2,50,000 S. B. A/c. No. 60002 ------------- Rs. 30,00,000 -------------

Of this amount, Rs. 16,75,000 was taken out of the petitioner''s name in the following way :

23-11-1996 Rs. 1,50,000 25-2-1997 Rs. 11,00,000 10-6-1997 Rs. 4,25,000 --------------- Rs. 16,75,000 --------------

This left an amount of Rs. 13,25,000 still in his name. As against this, what remains attached u/s 281B by the Department is just Rs. 12,82,199 after the release of Rs. 9,73,047 on January 4, 1999.

Thus, the attachment of an amount of Rs. 12,82,199 is standing in the name of the petitioner is legal as this money belongs to the Hindu undi- vided family against whom an order u/s 281B was passed and served and against whom notices u/s 148 were issued."

In the replication filed by the petitioner, it has been averred that the amount attached by respondent No. 3 does not relate to part of the compensation deposited in his name out of Rs. 82,15,822 received in the name of Tek Ram, Hindu undivided family. The petitioner also filed additional affidavit dated March 27, 2000, along with C. M. No. 5926 of 2000, to show that out of the amount of Rs. 30,00,000 received out of the compensation amount, a sum of Rs. 29,75,000 had been returned in various forms between November, 1996, and June, 1997. The statement made in paragraphs 4 and 5 of the said affidavit reads as under :

"4. That out of the amount of Rs. 30 lakhs received by the deponent from his father, Shri Tek Ram, an agreement to purchase land was entered into between Shri Aji Ram and Shri Tek Ram (deponent''s father) for the purchase of 110 kanal 15 marlas for the sale consideration of Rs. 87,81,563 for which Rs. 9 lakhs was paid as earnest money in the account of Shri Aji Ram, i.e., account No. 60200 in the Union Bank of India. Jharsatly, on November 5, 1996, by the deponent on account of the money received from the deponent''s father for the said purpose.

That further a sum of Rs. 4 lakhs was deposited in the account of Shri Aji Ram, on January 9, 1997, by the deponent on behalf of Shri Tek Ram from the money given by Shri Tek Ram to the deponent for the said purpose. The deponent further deposited Rs. 1,50,000 on November 23, 199G, in the account of Shri Tek Ram, i.e., account No. 60126, in the Union Bank of India, Jharsatly, from the money received from Shri Tek Rani by the deponent. Further, on February 25, 1997, the sum of Rs. 11 lakhs was deposited in the account of Shri Tek Ram by the deponent and finally on June 10, 1996, Rs. 4,25,000 were deposited in Shri Tek Ram''s account by the deponent from the amount received from Shri Tek Ram. Thus, out of the total amount Rs. 30 lakhs, Rs. 29,75,000 had been returned vide bank transactions and thus no liability qua the said amount remained with the deponent."

Before proceeding further, we may mention that during the pendency of the writ petition, respondent No. 3 had released Rs. 9,21,724 vide order annexure P-15, dated January 4, 1999. He released another amount of Rs. 6,85,000 vide annexure P-18, dated October 29, 1999, and the only controversy which survives relates to a sum of Rs. 5,97,199.

We have heard learned counsel for the parties. Section 281B of the Act under which the impugned order has been passed reads as under :

"281B. (1) Where, during the pendency of any proceeding for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment, the Assessing Officer is of the opinion that for the purpose of protecting the interests of the Revenue it is necessary so to do, he may, with the previous approval of the Chief Commissioner, Commissioner, Director-General or Director, by order in writing, attach provisionally any property belonging to the assessee in the manner provided in the Second Schedule.

Explanation.--For the purposes of this sub-section, proceedings under Sub-section (5) of Section 132 shall be deemed to be proceedings for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment.

(2) Every such provisional attachment shall cease to have effect after the expiry of a period of six months from the date of the order made under Sub-section (1) :

Provided that the Chief Commissioner, Commissioner, Director-General or Director may, for reasons to be recorded in writing, extend the aforesaid period by such further period or periods as he thinks fit, so, however, that the total period of extension shall not in any case exceed two years :

Provided further that where an application for settlement u/s 245C is made, the period commencing from the date on which such application is made and ending with the date on which an order under Sub-section (1) of Section 245D is made shall be excluded from the period specified in the preceding proviso."

A bare reading of the provisions quoted above shows that an order of provisional attachment can be passed by the Assessing Officer if he is of the opinion that for the purpose of protecting the interests of the Revenue, it is necessary to pass such an order. However, the plain language of the said provision shows that such an order can be passed only in respect of the property of the assessee and not of any other person.

In the light of the above, we have to determine as to whether, respondent No. 3, could have attached the amount lying in the FDRs and SB accounts of the petitioner to which reference has been made in the attachment order in the name of protecting the Revenue''s interest in relation to the compensation received by Tek Ram, Hindu undivided family, on July 23, 1996. A careful reading of the averments made in paragraph 6 of the written statement shows that out of Rs. 82,15,822 received by Tek Ram, Hindu undivided family, on July 23, 1996, as compensation, Rs. 30 lakhs had been deposited in the petitioner''s name in two FDRs bearing Nos. J-151 and 503, dated July 23, 1996, and S/B Account No. 60002. The FDR Nos. J-608 and 613 which have been attached by the impugned order do not find mention in the written statement filed by the respondents. This, in our opinion, is clearly indicative of the fact that the two FDRs which had been attached by respondent No. 3 did not constitute the property of the assessee i.e., Tek Ram, Hindu undivided family. That apart, learned counsel for the respondents could not draw our attention to any document to show that the FDRs attached by respondent No. 3 were created out of the compensation received by Tek Ram, Hindu undivided family.

In view of the above, we hold that respondent No. 3 had acted beyond his jurisdiction in passing the order of attachment in respect of the property of the petitioner which did not belong to the assessee-Tek Ram, Hindu undivided family.

Hence, the writ petition is allowed. Annexure P-8 is quashed in so far as it relates to two FDRs of the petitioner and keeping in view the fact that part of the amount has been released during the pendency of the writ petition, we direct the concerned officer to release the remaining amount which forms part of FDR No. J-608. This shall be done within two months of the receipt/submission of a certified copy of this order.