Prohibitory restraint under income-tax seizure powers cannot compel a bank to encash fixed deposits for the department.

Section 132(3) of the Income-tax Act, 1961 permits only a prohibitory restraint over seized deposits and does not authorise revenue authorities to compel a bank to encash a fixed deposit and issue a draft in favour of the department. The challenge to the assessment and penalty orders on alleged defective service of notice was left unresolved on the facts, and no conclusive finding was recorded because of the pending appeal. Immediate refund of the seized amount was also declined in writ jurisdiction, although the Court noted that if the assessment or penalty is later set aside, the petitioner may seek refund with interest.

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Issues: Whether the assessment and penalty orders could be quashed for alleged lack of valid service of notice, whether the direction to the bank to convert the fixed deposit into a draft could be sustained under the seizure powers, and whether refund of the seized amount could be ordered in writ jurisdiction.

Analysis: The question of valid service of notice depended on factual investigation and, in view of the pending appeal, no conclusive finding was recorded on the jurisdictional challenge. The direction to the bank to prepare a draft in favour of the Commissioner was not supported by section 132(3) of the Income-tax Act, 1961, which contemplates only a prohibitory restraint on dealing with the deposit. However, the petitioner had not established a case for immediate refund in writ jurisdiction, particularly in view of the conduct noticed by the Court and the subsisting assessment and penalty demands.

Conclusion: The assessment and penalty orders were not quashed in these proceedings, the challenge to the bank direction failed, and no refund relief was granted.

Final Conclusion: The writ petition was not entertained for grant of substantive relief, though the Court clarified that the bank could not be directed under section 132(3) to convert the fixed deposit into a draft, and any eventual setting aside of the assessment or penalty would entitle the petitioner to claim refund with interest.

Ratio Decidendi: Section 132(3) of the Income-tax Act, 1961 authorises only a prohibitory restraint over deposited money and does not empower the revenue authorities to compel the bank to encash a fixed deposit and issue a draft in favour of the department.

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