2004 (8) TMI 98

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.... 2000, to the petitioner asking him to pay the tax by April 12, 2000. The demand notice contained certain mistakes and on an application filed by the petitioner, the notice was rectified by the second respondent on March 8, 2002, and the tax was revised to Rs. 157.77 lakhs. The petitioner contended that he had disposed of some properties in 1998 and invested sale proceeds in a sum of Rs. 65 lakhs with the third respondent in the units of Monthly Income Plan 1998-III under the Capital Gains Scheme and had sought exemption under section 54EA of the Income-tax Act, 1961 (for short "the I.T. Act"). The said units were transferable after three years of deposit, i.e., in September, 2001, on face value of Rs. 10 per unit. The said units could also....

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....units. The said notice and the attachment of the petitioner's units was in the nature of a garnishee order to the third respondent. It is further contended that even if it is assumed that the attachment made by the second respondent was valid, the third respondent was merely obliged to hold the money that would become due to the petitioner on the said units and since the said units were under the lock-in period under the Capital Gains Scheme and were within the hold and control of the third respondent, he could not have sold them. It is further contended that it was a matter of record that on account of mismanagement and change in policy of the Unit Trust of India, the face value per unit had fallen to Rs. 7 per unit in September, 2001, as ....

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....y which some interest was levied on him. Section 226(3)(i) of the Income-tax Act lays down, "(i) the Assessing Officer or Tax Recovery Officer may, at any time or from time to time, by notice in writing require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee, to pay to the Assessing Officer or Tax Recovery Officer either forthwith upon the money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than th....

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....ugh the units have been attached, the UTI ought to have obtained the consent of the petitioner before sale and as such the loss, if any, on account of sale cannot be attributed to the second respondent. In the counter-affidavit filed by the third respondent-UTI it has been stated in para. 5(ii): "In reply to para. 4, I submit that the investment made by the petitioner in the Monthly Income Scheme 1998-III under the capital gain exemption and the unit holder can transfer the units purchased after three years and the repurchase price will be based on the net asset value (NAV) of the scheme on the units. Hence, the contention of the petitioner that the units held by him will be transferable after three years of deposit at par on face val....