Law:

Section:

I. MAHMUD, J.--This Constitutional Petition raises a short question of law whether a sum of money which is to be paid to the beneficiary of a commercial Letter of Credit against presentation of documents is money due to him or held for and on his account which is liable to be attached under section 46(5-A) of the Income-tax Act, 1922.   The petitioner, the First National City Bank, a Banking Company incorporated in the U. S. A. carries on banking business in Pakistan through a registered branch office in Karachi. Messrs Abbas Steel Industries. Karachi (hereinafter referred to as "Abbas Steel") had agreed to purchase a ship m. v. "Gulf Diamond" ex "Baltistan" , and were required under their contract to remit the purchase price of U. S. $ 779,145.05 to Messrs W. J. Towell & Company Agencies (Kuwait) (hereinafter referred to as "Towell & Co."). Accordingly, on 19-9-1974 at the request of Abbas Steel and upon the guarantee of their bankers the Agricultural Development Co-op. Bank Ltd., Karachi, the petitioner opened a confirmed and irrevocable Letter of Credit in the said amount in favour of Towell & Co. through the National Bank of Kuwait S. A. K.,, Kuwait (hereinafter referred to as "The Kuwait Bank") available by negotiation of sight draft drawn on Abbas Steel and accompanied by certain named documents, namely a Bill of Exchange, a Bill of Sale, Invoice etc. A copy of the L/C dated 19-9-1974 is Annexure B' to the petition. After making payment to Towell & Co. against the documents on 3010-1974, the Kuwait Bank forwarded the documents to the petitioner with a request for re-imbursement by placing the said amount to the credit of their A/C with the petitioner's Bank in New York.   It appears that Towell & Co. were defaulting assessee against whom there were arrears of Pakistan income-tax and penalty for the assessment years 1971-72 and 197273. Upon coming to know of the opening of the L/C. the Income-tax Officer, the respondent No. 1, issued two notices to the petitioner under section 46(6-A) of the Income-tax Act, 1922 on 6th and 7th November 1974 respectively, requiring the…