Law:

Section:

Section 226 of the Income-tax Act, 1961 - Collection and recovery of tax - Other modes of recovery - Assessment year 2009-10 - Whether no recovery of tax should be made pending (a) expiry of time-limit for filing an appeal; and (b) disposal of a stay application, if any, moved by assessee and for a reasonable period thereafter to enable assessee to move a higher forum - Held, yes - Whether when a bank account has been attached, before withdrawing amount reasonable prior notice should be furnished to assessee to enable it to make a representation to seek recourse to a remedy in law - Held, yes - Assessee-trust was beneficiary of a trust set up for securitizing a loan of Rs. 300 crores which was granted by Yes Bank to HPCL - For relevant assessment year, said trust was assessed in status of AOP as against status of individual claimed by trust and a demand of tax was raised - Trust filed application for stay of demand - Without disposing said application and without making assessment against assessee, Assessing Officer sent a communication to assessee requiring it to make payment of certain amount on ground that it was a member of AOP (Trust) and was jointly and severally liable in respect of demand against AOP - Immediately on receipt of demand on 7-3-2012 assessee moved Assessing Officer with an application for stay - It also moved Commissioner on 9-3-2012 with a request for intervention in matter - It received a communication recording that application had been disposed of on 13-3-2012 - In meantime, a garnishee notice dated 12-3-2012 was addressed to bankers of assessee calling upon them to deposit certain amount for and on account of arrears claimed from assessee - Whether on facts, action of Assessing Officer was justified - Held, no - Whether, therefore, pending disposal of appeal and for a period of six weeks thereafter, revenue was to be directed not to take any coercive steps against assessee for enforcing demand and to refrain from enforcing notice issued under section 226(3) - Held, yes [In favour of assessee] FACTS The assessee was a trust registered with the SEBI as a Mutual Fund. Its income was exempt under the provisions of section 10(23D). On…

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