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ilaben Ramanlal Zariwala Vs. Union of India and Others. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtGujarat High Court
Decided On
Case NumberSpecial Civil Leave Application No. 1723 of 1978
Reported in(1979)12CTR(Guj)217; [1979]118ITR852(Guj)
Appellantilaben Ramanlal Zariwala
RespondentUnion of India and Others.
Excerpt:
- - it is urged before us that, on merits, the petitioner does not deserve any sympathy from the court and that, on merits, the case of the petitioner as regards the income-tax proceedings is so bad that no orders should be passed on this special civil application......the petitioner deposited the amount of rs. 56,000 along with the declaration of deposit with the state bank of india, surat branch, and the petitioner had also notified the state bank of india, surat branch, about her own personal bank account into which the state bank of india was requested to pay the amount of rs. 56,000. before the state bank of india, in exchange for the high denomination notes, paid the amount of rs. 56,000 to the petitioners account, a prohibitory order under s. 281b of the i.t. act was passed by the ito, circle ii-d (revenue), surat, directing the agent, state bank of india, not to pay the amount of rs. 56,000 to the petitioner or to her account. this power of provisional attachment under s. 281b was exercised by the ito who is the fourth respondent herein as.....
Judgment:

DIVAN C.J. - In this petition under art. 226 of the Constitution, the petitioner has challenged the action of the State Bank of India, Surat Branch, in not paying to her an amount of Rs. 56,000 in exchange for high denomination notes, for which originally the Ordinance called the High Denomination Bank Notes (Demonetisation) Ordinance, 1978, was promulgated by the President and subsequently the Ordinance having been replaced by the High Denomination Bank Notes (Demonetisation) Act, 1978. The case of the petitioner is that she is the sole proprietor of the firm called Shreejee Diamond Industries and she carries on business at Mahidharpura, Zaveri Bazar, Surat. According to her, the petitioners business is of diamond cutting and she earns livelihood from the income thereof. The petitioner, according to her, is an income-tax payer and has filed income-tax returns for the assessment year 1978-79, ending 31st March, 1978. According to the petitioner, she received a demand draft for Rs. 65,000. This demand draft was issued on December 20, 1977, and the same was negotiated by her with one Vijaykumar Champaklal Choksi of Surat on December 22, 1977. After taking the discount, Vijaykumar Choksi paid the amount of Rs. 65,000 in high denomination notes to the extent of Rs. 56,000 and the balance of the amount was paid to her in notes of Rs. 100 and smaller denomination notes. On January 19, 1978, the petitioner deposited the amount of Rs. 56,000 along with the declaration of deposit with the State Bank of India, Surat Branch, and the petitioner had also notified the State Bank of India, Surat Branch, about her own personal bank account into which the State Bank of India was requested to pay the amount of Rs. 56,000. Before the State Bank of India, in exchange for the high denomination notes, paid the amount of Rs. 56,000 to the petitioners account, a prohibitory order under s. 281B of the I.T. Act was passed by the ITO, Circle II-D (Revenue), Surat, directing the Agent, State Bank of India, not to pay the amount of Rs. 56,000 to the petitioner or to her account. This power of provisional attachment under s. 281B was exercised by the ITO who is the fourth respondent herein as the assessment proceedings were pending and intimation was sent to the State Bank of India stating that because an order under s. 281B had been passed against the petitioner, it was ordered that the petitioner was prohibited and restricted until after the order of the ITO from receiving from the State Bank of India the sum of Rs. 56,000 declared under the High Denomination Notes (Demonetisation) Ordinance. It is the case of the petitioner, as urged at the stage of arguments before us, that provisional attachment must cease to have effect after the expiry of a period of six months from the date of the order made under sub-s. (1) of s. 281B but, under the proviso, the Commissioner may, for reasons to be recorded in writing, extend the aforesaid period of six months 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. Miss Shah on behalf of the petitioner urged before us at the time of hearing that, on the last day of the period of six months contemplated by s. 281B(2) of the I. T. Act, the ITO, Circle II-D, has purported to pass another order directing the Agent of the State Bank of India, Surat, that the amount of Rs. 56,000 should be retained with the State Bank of India until further order of the ITO and, until further orders, this amount should not be paid to the petitioner, and this order of extension of time was granted on September 26, 1978. Now, it is to be borne in mind that extension can only be granted by the CIT under the proviso to s. 281B(2). In this case, we have been shown an order passed by the CIT, Baroda, on September 26, 1978, or before that date, purporting to approve the proposal of the ITO to extend the period of provisional attachment under s. 281B(1) for a further period of six months. There are no reasons recorded in writing for extending the original period of six months by a further period of six months. The proviso to sub-s. (2) of s. 281B contemplates that it is for the Commissioner to pass an order of extension of time and that too for reasons to be recorded in writing.

It is urged before us that, on merits, the petitioner does not deserve any sympathy from the court and that, on merits, the case of the petitioner as regards the income-tax proceedings is so bad that no orders should be passed on this Special Civil Application. It is urged in the alternative that, by his approval of the proposal put up by the ITO on September 16, 1978, asking for an extension of time, the Commissioner did pass the order. The proposal form, as completely filled in, has been shown to us and a copy of the proposal form put up by the ITO and the orders passed thereon has been kept on the record of the case. Columns Nos. 1 to 7 do not deal with extension of the period of attachment under s. 281B of the I. T. Act. Column No. 8 is in these terms :

'Whether, this is fresh proposal or for extension of time. If it is for extension of time, No. and date of approval granted for the first time should be mentioned.'

And against this column, the ITO has written : 'The period of six months expires on 24-9-78. As the enquiry is still pending, extension may be granted for further six months. Approval under s. 281B was granted by the CIT, Guj. II, by his letter No. Conf. Hq. 182/B-17/78 dt. 24-3-78.' There is nothing else mentioned on the face of the order as to why the Commissioner in his discretion thought it fit that the period of attachment should be extended by a further period of six months. Column No. 9 provides for IACs remarks and from the entry against that column, it appears that the IAC made certain remarks by another document which is not before us, on September 18, 1978, and the order of the CIT is that the proposal is approved. But even after approving the proposal, it is for the CIT to pass the order for extension. From the letter addressed to the Agent, State Bank of India, Surat, on September 26, 1978, a copy of which is also kept on the record of the case, it does not appear anywhere that the order of extension was passed by the CIT. This is an intimation sent by the ITO concerned, the fourth respondent herein, to the Agent, State Bank of India, Surat, that the period of attachment was to continue till further orders of the ITO. How the ITO could have sent this intimation that the period of attachment was extended until further orders is difficult to understand and appreciate. However, it is obvious that if the documents which are shown to us do not amount to an order of extension of time passed by the CIT after recording in writing his reasons for the extension of time, the attachment cannot continue after 26th September, 1978, because the period of six months contemplated by s. 281B(2) came to an end on September 26, 1978. In our opinion, though the proposal was approved and to that extent it is possible to say by stretching the language that the Commissioner decided that the period of attachment should be extended, yet there is no order by the Commissioner himself that the period of provisional attachment should be extended by a further period of six months. The only possible reason for extension of time which emerges from the documents before us is 'as the enquiry is still pending.' The Commissioner does not appear to have found out why the inquiry was still pending and how long the inquiry was likely to take. The Commissioner does not seem to have applied his mind to any reasons for the extension of the period of attachment for a further period of six months beyond this ipse dixit of the ITO concerned that the inquiry was still pending. In our opinion, this is a mere apology for reasons to be recorded in writing and not the reasons which are contemplated by the proviso to s. 281B(2). Under these circumstances, the only conclusion that we could reach is that appropriate order for extension of the period of provisional attachment as contemplated by the proviso to s. 281B(2) has not been passed in the instant case (1) by the officer concerned, and (2) in the manner in which and after satisfying the conditions precedent which are prescribed by the proviso. Under these circumstances, it is obvious that the period of provisional attachment expired by efflux of time on September 26, 1978. We are not concerned in the present case with the merits or demerits of the behaviour and the income-tax payers image. All that we are concerned is whether there is a legal and valid order or attachment in operation and it is obvious that if there is no proper, valid and legal order in existence, it is obligatory on the State Bank of India, the third respondent herein, to pay to the petitioner the amount of Rs. 56,000 in exchange for the high denomination notes.

Miss Shah for the petitioner says that the petitioner will open a new savings bank account with the Bank of Baroda, Vania Sheri Branch, Surat, tomorrow and that the State Bank of India should be asked to pay the amount of Rs. 56,000 to the Bank of Baroda, Vania Sheri Branch, Surat, for being credited to that newly opened account. In the view that we take about the extension of the period of attachment not being valid, it is obvious that a mandamus must go to the State Bank of India, Surat branch, directing them to pay the amount of Rs. 56,000 to the newly opened savings bank account of the petitioner with the Bank of Baroda, Vania Sheri branch, Surat. However, in order to see that no complications may arise in future and in order to see that proper steps at all levels can be taken, the Bank of Baroda, Vania Sheri branch, Surat, is directed, not to allow the petitioner to operate as against this amount of Rs. 56,000 before January 1, 1979. Miss Shah, on behalf of the petitioner, undertakes that the petitioner will not operate upon the newly opened savings bank account so far as the amount of Rs. 56,000 is concerned before January 1, 1979.

This Special Civil Application is, therefore, allowed and orders are made accordingly. Rule made absolute. There will be no orders as to costs.

Intimation of the present order to be sent to the Bank of Baroda, Vania Sheri branch, Surat.


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