Statutory attachment bars coercive tax recovery, but assessment of income from attached properties may still proceed in law.

Where properties remain under statutory attachment, income-tax authorities may call for income statements from the receiver and proceed with assessment according to law, but coercive recovery from the receiver or sale of the attached assets is barred while the attachment continues. A separate proceeding cannot order refund of tax already realised on existing assessments unless those assessment orders are first set aside in accordance with law. The refund direction was therefore set aside, while assessment proceedings were permitted to continue and recovery remained suspended during the subsisting attachment.

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Issues: Whether income-tax could be recovered from, or refunded to, the receiver in respect of income arising from properties attached under the Criminal Law Amendment Ordinance, 1944, while the attachment continued.

Analysis: The attachment under the Ordinance barred recovery by sale or attachment of the properties so long as the statutory attachment remained in force. The prior order upheld by the Court did not finally decide the broader liability of the owner or representative assessee to be assessed to income-tax on income arising from the attached properties. At the same time, tax already realised on the basis of assessments could not be directed to be refunded in a separate proceeding without the assessment orders first being set aside in accordance with law. The income-tax authorities were, however, entitled to call for statements of income received by the receiver and to proceed with assessment according to law, but not to enforce recovery during the subsisting attachment.

Conclusion: The impugned order directing refund was set aside, while recovery of tax from the receiver and coercive steps against the attached properties remained barred during the continuance of the attachment; assessment proceedings could still be taken in accordance with law.

Ratio Decidendi: Where properties remain under statutory attachment, tax authorities may assess income arising therefrom in accordance with law, but coercive recovery against the attached assets or a refund direction inconsistent with subsisting assessments cannot be made in collateral proceedings.

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