Pension account attachment during pending tax appeal is unsustainable where binding recovery instructions require collection to await disposal.

Pending a statutory appeal, the Revenue was bound to follow departmental circulars and CBDT instructions requiring recovery to remain in abeyance until the appeal was disposed of. The Madras HC further recognised that pensionary benefits are retiral dues and a source of livelihood, and therefore are not liable to attachment for tax recovery. On those facts, a provisional attachment under Section 281B of the Income-tax Act, 1961, including the petitioner's pension account, could not be sustained and the demand recovery action was held unsustainable.

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Issues: Whether the demand notice and provisional attachment could be sustained during the pendency of the statutory appeal, particularly when the attachment included the petitioner's pension account.

Analysis: The writ petition challenged recovery action taken while the statutory appeal under Section 246 of the Income-tax Act, 1961 was pending. The Court held that departmental circulars and CBDT instructions requiring collection to be kept in abeyance till disposal of the appeal were binding on the Revenue authorities. It also noted the settled position that pension, being retiral benefit and the petitioner's source of livelihood, is not liable to attachment. In these circumstances, the provisional attachment issued under Section 281B of the Income-tax Act, 1961 could not be sustained, especially as it operated against the petitioner's pension account despite the pending appeal and stay application.

Conclusion: The attachment and demand recovery action were unsustainable and relief was due to the petitioner.

Ratio Decidendi: Pending a statutory appeal, the Revenue must follow binding departmental instructions governing recovery, and pensionary benefits cannot be attached for tax recovery.

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