2022 (10) TMI 238 - HC - Income Tax

Court Orders Bank to Release Elderly Petitioner's Fixed Deposits, Finding Lack of Clarity in Attachment Order

Swaran Chopra Versus The Nainital Bank Ltd. & Anr.

Swaran Chopra Versus The Nainital Bank Ltd. & Anr. - TMI Issues:1. Attachment order on fixed deposits under Section 226(3) of the Income Tax Act, 1961.2. Ownership of fixed deposits and tax implications.3. Validity of the attachment order and its impact on the petitioner's fixed deposits.4. Dispute over the attachment order and instructions from Assessing Officers.5. Role of the Bank in withholding encashment of fixed deposits.6. Examination of contentions and evidence presented by the parties.7. Resolution of the matter and direction to lift the attachment order.Issue 1: Attachment Order on Fixed DepositsThe petitioner sought a direction to lift the attachment order dated 27th December, 2019, issued under Section 226(3) of the Income Tax Act, 1961, concerning fixed deposits held with the Nainital Bank Ltd. The petitioner, an 88-year-old senior citizen, primarily held the fixed deposits, with her son being a secondary holder for emergency access. The petitioner asserted that the entire amount in the fixed deposits belonged to her, supported by tax filings and TDS credits to her PAN.Issue 2: Ownership of Fixed Deposits and Tax ImplicationsThe petitioner's counsel highlighted that the fixed deposits solely belonged to the petitioner, evidenced by tax filings and TDS credits. The Bank confirmed TDS credits to the petitioner's PAN, emphasizing her ownership. The petitioner's age and the rationale for adding her son as a joint holder for emergency purposes were considered plausible by the court.Issue 3: Validity of the Attachment OrderThe court noted that the attachment order was directed at the bank accounts of the petitioner's son, Sh. Ravi Chopra, and not the petitioner's fixed deposits. The order lacked specific details regarding the petitioner's fixed deposits, reinforcing the petitioner's claim of ownership. The Bank's cautious approach in seeking clarification on the attachment order's application to the petitioner's fixed deposits indicated a lack of clarity from the Assessing Officer.Issue 4: Dispute Over the Attachment Order and Instructions from Assessing OfficersInstructions from the Assessing Officers revealed no records linking the petitioner to the attachment order. The petitioner's AO and Sh. Ravi Chopra's AO confirmed the lack of petitioner's involvement in the order. The court observed a disconnect between the attachment order and the petitioner's fixed deposits, leading to a resolution in favor of the petitioner.Issue 5: Role of the BankThe Bank, represented by counsel, acknowledged that the attachment order was the basis for withholding encashment of the fixed deposits. Despite the order, the Bank had not remitted the amounts from the petitioner's fixed deposits, indicating a reluctance to treat them as assets of Sh. Ravi Chopra. The Bank's cautious stance and attempts to seek clarification demonstrated a lack of clarity in the attachment's application.Issue 6: Examination of Contentions and EvidenceThe court reviewed the contentions raised by both parties and found no dispute regarding the petitioner's tax filings, ownership of fixed deposits, and the lack of connection between the attachment order and the petitioner's assets. The Department and the Bank did not present any argument that would disentitle the petitioner from relief sought in the writ petition.Issue 7: Resolution and DirectionBased on the examination of facts and contentions, the court held that the attachment order did not apply to the petitioner's fixed deposits and directed the Bank to allow the petitioner to encash her fixed deposits without delay. The court disposed of the writ petition in favor of the petitioner, resolving the matter conclusively.This detailed analysis of the judgment highlights the key issues, arguments presented, and the court's decision, ensuring a comprehensive understanding of the legal proceedings and outcome.