Provident fund attachment protection: amounts in a PPF account remain immune from income-tax recovery while undistributed.

Amounts standing to the credit of a subscriber in a Public Provident Fund account remain statutorily protected from attachment for income-tax recovery while they stay in the fund. The Public Provident Fund Act, 1968, read with section 60(1)(ka) of the Code of Civil Procedure, 1908 and Rule 10 of Schedule II to the Income-tax Act, 1961, was construed harmoniously to preserve that exemption in tax recovery proceedings. Any administrative clarification could not override this statutory protection. On that basis, attachment and withdrawal of the provident fund amount were unlawful, and recovery from the account was set aside.

---

---

Issues: Whether the amount standing to the credit of a subscriber in a Public Provident Fund account is immune from attachment and recovery for income-tax dues, and whether the tax recovery authorities could lawfully attach and withdraw such amount.

Analysis: The Public Provident Fund Act, 1968 is a benevolent enactment intended to encourage long-term savings and social security. Section 9 protects the amount standing to the credit of a subscriber from attachment. Rule 10 of Schedule-II to the Income-tax Act, 1961 extends to tax recovery proceedings the same exemption available from civil court attachment under the Code of Civil Procedure, 1908. Section 60(1)(ka) of the Code of Civil Procedure, 1908 specifically exempts deposits and sums in a fund to which the Public Provident Fund Act applies, so long as the Act declares them not liable to attachment. Reading these provisions harmoniously, the immunity continues while the amount remains in the provident fund account. The CBDT clarification could not override the statutory scheme.

Conclusion: The amount in the Public Provident Fund account was not liable to attachment for recovery of income-tax dues, and the attachment and withdrawal made by the revenue authorities were unlawful.

Final Conclusion: The writ petition succeeded and the impugned recovery from the Public Provident Fund account was set aside, affirming protection of provident fund accumulations from tax attachment while they remain undistributed.

Ratio Decidendi: Amounts standing to the credit of a subscriber in a Public Provident Fund account are statutorily exempt from attachment for tax recovery so long as they remain in the fund, and the recovery provisions of the tax law must be read consistently with that exemption.

---