Bank attachment under income-tax recovery provisions required enquiry into third-party liability before further recovery action could continue.

A bank account attachment under section 226(3) of the Income-tax Act was challenged on the ground that the petitioner claimed no liability for her mother's tax arrears and disputed notice of the attachment proceedings. The High Court directed the Department to conduct an enquiry on whether the amount in the account was liable to attachment, permitted the petitioner to produce documents to support her claim, and ordered temporary protection of part of the funds during the enquiry. The Department was left free to proceed further if the enquiry established liability.

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Issues: (i) Whether the Department could proceed under section 226(3) of the Income-tax Act, 1961 to attach the amount lying in the bank account, and whether the petitioner had received notice of the attachment proceedings; (ii) Whether the petitioner should be given an opportunity to establish that the amount was not liable to be attached as her mother's tax arrears.

Analysis: The petition raised a dispute as to the liability of the amount sought to be recovered through the bank and the petitioner's entitlement to contend that she did not owe money to her mother. The order directed the Department to hold an enquiry on that question, allowed the petitioner to produce documents and establish her case, and preserved both sides' interests by requiring a temporary freeze of a portion of the funds during the enquiry period.

Outcome: The writ petition was allowed to the limited extent of directing an enquiry and granting interim protection, while leaving it open to the Department to take appropriate proceedings if the enquiry went against the petitioner.

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