Law:

Section:

Section 226 of the Income-tax Act, 1961 [Corresponding to section 46(5A) of the Indian Income-tax Act, 1922] - Collection and recovery of tax - Other modes of recovery - Assessment years 1948-49 to 1953-54 - Petitioner/assessee was assessed to tax for relevant assessment year - As a result of said assessments, certain amount became due from assessee as arrears of tax - Assessee had opened an overdraft account with 'I' bank for which he had pledged with them certain property - ITO served a notice on 'I' bank under section 46(5A) of 1922 Act directing it to pay over department difference between limit of overdraft allowed to assessee and amount drawn by him up to date of notice - Whether in view of provision of section 46(5A) of 1922 Act, aforesaid notice was beyond jurisdiction of respondent - ITO - Held, yes - Whether, therefore, impugned notice was to be set aside - Held, yes FACTS The petitioner was a dealer in skins. He was assessed to income-tax for the years 1948-49 to 1953-54. As a result of these assessments a sum of over Rs. 3 lakhs was found due from the petitioner as arrears of tax. The petitioner had for the purpose of his business opened an overdraft account with the 'I' Bank, for which he had pledged with them his stock of hides and skins. The limit set to the overdraft by the bank was at Rs. 1,37,500. On the date relevant to the instant petition the assessee had drawn on that account a sum of Rs. 1,31,301 them and this sum was shown in the books of the bank as debit to his account. While so, the Additional Income-tax Officer, served a notice on the 'I' Bank under section 46(5A) of 1922 Act to pay him forthwith any amount due from them to, or held by them for, or on account of, the petitioner up to the amount of arrears shown and also to pay any money which might subsequently became due from them to him or which they might subsequently hold for or on account of him up to the amount of arrears still remaining unpaid, forthwith, as such payment was required to meet the amount due by the taxpayer in respect of arrears of income-tax and penalty. On receipt of said notice, a copy of which was also sent to the assessee, the bank replied to the Income-tax…

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