DUA, J. - The petitioner, Sahukara Bank Ltd., Ludhiana, had some branches in Pakistan before partition. As a result of partition, the bank was faced with great difficulties, with the result that a scheme under section 153, Indian Companies Act, was presented to this court which was sanctioned in due course. Some Muslim depositors had also dealings with this bank and one Mohammad Akram of Ikram-Ullah and Sons had an account with the bank at Ludhiana in the name of Messrs. Army Stores Supplying Company. It is common case of the Parties that this firm had a deposit of Rs. 10,266-7-6 as on January 1, 1948, with this bank. As a result of partition, the Muslim customers migrated to Pakistan. It appears that this customer owed to the income-tax department a certain amount on account of tax. In 1959, the Income-tax Officer, Ludhiana, wrote to the bank enquiring if there was any account with them of Mohammad Akram of Ikram-Ullah and Sons in the name of Army Stores Supplying Company. The bank replied in December, 1959, that they had one account in 1948, which, along with the accounts of other Muslim depositors, who had migrated to Pakistan, had been transferred to Lyallpur books of the bank and they had no account in the books of the bank at Ludhiana. On December 9, 1960, the Income-tax Officer sent a notice to the bank under section 46(5A), Indian Income-tax Act, 1922, requiring the bank to deposit in the Government account of the assessee, Messrs. Army Stores Supplying Company, the amount of Rs. 10,000 or more standing to the credit of the assessee with the bank. It appears that some further correspondence passed between the parties and the manager of the bank, who was summoned under section 37 of the Indian Income-tax Act. In January, 1962, a tax recovery certificate is stated to have been issued by the Income-tax Officer, 'F' ward. Ludhiana, for the recovery of Rs. 12,104.37 nP. to the petitioner bank as arrears of hand revenue in respect of the tax due from Shri Mohammad Akram of Messrs Army Stores Supplying Company, Ludhiana. It is against these proceedings that the present petition has been presented by the bank under articles 226 and 227 of the Constitution.
According to the return, the bank had admittedly a sum of Rs. 10,226-7-6 with them standing to the credit of Messrs. Army Stores Supplying Company, Ludhiana, which was actually entered in the books of account at Ludhiana. On June 29, 1948, the petitioner bank even debited an amount of Rs. 2 on account of incidental charges to this account maintained at Ludhiana at that time. According to the statement of account maintained by the bank, this amount was transferred to Pakistan, as, according to the banks own admission, its branches in Pakistan had ceased to function on the partition of the country. The transaction of transfer is described to be a sheer paper transaction made with the object of evading the banks liability. On August 20, 1951, the total tax demand of Rs. 12,102.87 nP. was assessed against Messrs. Army Stores Supplying Company in Bazar Kharadian, Ludhiana, for the years 1942-43 to 1948-49.
The petitioners submission strongly pressed before me on the authority of P. Rajeshwaramma v. Income-tax Officer, Nellore, is that, once the bank denied that any money was due from it to the assessee, the Income-tax authorities ceased to have any jurisdiction to proceed under section 46(5A) of the Indian Income-tax Act, 1922, whereas, on behalf of the revenue, it has been canvassed with equal force that on the banks own showing this paper transaction of transfer is not genuine and is a mere sham. Neither has the amount been paid to the customer nor is it being paid to the revenue on behalf of the assessee. There being no law under which the bank could have transferred this amount to Pakistan and indeed, in fact and in substance, the amount having not been transferred, the revenue is entitled to proceed under section 46(5A). The learned counsel has tried to get assistance from a decision of the Supreme Court in Delhi Cloth & General Mills v. Harnam Singh.
Shri Aggarwal has also raised the plea of time-bar basing it on section 467 of the Indian Income-tax Act. This plea is met by the respondents by submitting that the recovery proceedings against the assessee were started within one year from the last day of the financial year and, in any case, the bank cannot urge this plea in answer to the present proceedings. The third point raised by Shri Aggarwal is that the scheme framed by the bank in 1948 covers the State Demand, though the Muslim customers who had gone to Pakistan were not covered by it. Shri Awasthy has controverted this submission and in the alternative tried to meet this point with the submission that if, according to the bank, the scheme covers the demand of the revenue, then it was for the bank to pay to the revenue 80 per cent. of the amount of the deposit in accordance with the terms of the scheme. The bank, according to the learned counsel, cannot keep the money to itself and decline to pay either to the customer or to the revenue on behalf of the assessee.
The points raised are, in my opinion, of some importance and are also bare of authority. The writ petition has been pending for more than two years. It is, therefore, desirable that this writ petition be decided by a larger Bench at the outset. Attempt should be made to secure the orders of my Lord the Chief Justice with due promptitude so that the petition may be disposed of within one month from today.
[The case was heard by a Division Bench composed of INDER DEV DUA and N. S. NARULA JJ. and the judgment of the court was delivered on 25th February, 1966, by N. S. NARULA J.]