TaxTMI 
TaxTMI 
1999 (12) TMI 828
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....12-1995 20-3-1998 Vimal Kumar 12,000 20-12-1995 20-3-1998 Dina Nath 6,500 18-5-1992 18-5-1997 Yash Kumar 15,000 15-12-1995 15-3-1998 Shanta 15,000 15-12-1995 15-3-1998 Shanta 15,000 20-12-1995 20-3-1998 Rajinder Singh 15,000 14-12-1995 14-3-1998 Sat Pal 15,000 15-12-1995 15-3-1998 Sat Pal 15,000 20-12-1995 20-3-1998 ----------------------------------------------------------------------- The grievance of the petitioners is that when they approached the bank on the date of maturity for releasing the payment against their FDRs, the bank informed them that the same had already been encashed by respondent No. 3, the Assistant Director of Income-tax, Ambala (for short "the ADI"), on the ground that the same belonged to respondent No. 5, Ved Parkash Anand, against whom proceedings under section 132 of the Income-tax Act, 1961 (for short "the Act"), had been initiated by the Income-tax Department. According to the petitioners, respondent No. 3 had no authority under the Act to prematurely encash their FDRs and take away the proceeds. Notice was issued to the respondents and detailed replies have been filed on behalf of the bank as well as the Assistant Director of Income....
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....was claimed that the action of respondent No. 3 in getting the FDRs encashed and taking away the proceeds along with her was not without jurisdiction as it was a valid seizure under section 132(1)(iii) of the Act. Respondent No. 3 also denied the charge that she has exercised any undue pressure on the then chief manager for release of cash or had held him in illegal confinement in his office. According to the Assistant Director of Income tax, she had informed the chief manager that she wanted to seize the FDRs in dispute which she was fully authorised to do. Thereafter, the chief manager had, after checking the authorisation, encashed the FDRs and handed over the drafts to her. In the light of conflicting stands taken by the bank and the Assistant Director of Income-tax we directed Mrs. Rekha Shukla, the then Assistant Director of Income-tax and the four concerned bank officials, namely, S. P. Malik, Krishan Chand Chandna, Vinod Sethi and L. K. Dham, to be personally present in the court along with the records. The relevant records of the Income-tax Department show that the bank itself had furnished information to the Department in respect of a number of FDRs (including the FDRs ....
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....on record that to cover up the irregularities, the bank vide letter dated May 29, 1997, had informed the Assistant Director of Income-tax that the account opening forms were available with it and the same could not be made available to her during search one to some confusion. The authorisation dated January 31, 1997, has also been produced in original in which the relevant FDRs have duly been mentioned. However, there is no written order or directions to the bank for the encashment of the FDRs. Respondent No. 3 has also produced a copy of assessment order in case of Sanjay Anand for the period April 1, 1996, to December 24, 1996, under section 158BC of the Act dated February 26, 1998, to show that the FDRs of the petitioners have already been assessed as undisclosed income in his hands. It has also been mentioned that the appeal against the said order is pending. We have also perused the records of the bank and find that the charge about the account opening forms being incomplete is correct. There are hundreds of forms containing only the names of the account holders without any particulars. In many forms in the address column or in the reference column names of some member of the....
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....ed June 18, 1997, to the Assistant Director of Income-tax stating that the beneficiaries were old aged persons, ladies, etc., who were unable to travel to Ambala. All these documents clearly lead to the inference that the bank records are totally incomplete and kept in an irregular manner. We are also left with an impression that all the subsequent letters written by the bank are either an effort to cover up its lapses or have been written at the instance of the Anand group. Such irregularities may enable a bank to fulfil its target of collecting deposits but can also make it a tool in the hands of unscrupulous persons who are out to evade tax. As far as the present petitioners are concerned, normally we would have relegated them to their remedy in the civil court for recovery of amounts due to them on account of maturity of their FDRs. The petitioners are holding the original fixed deposit receipts issued to them by the bank. It is also evident that there is no written order of attachment of the proceeds of these FDRs with the bank. In such circumstances, the claim of the petitioners could only be against the bank. However, since we have gone into the records of the bank as well ....
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....s under challenge. The court nowhere held that the attachment could be made by withdrawing the money lying in the bank accounts of depositors. In fact the High Court had noticed the judgment of the Kerala High Court in ITO v. M. Shajahan [1976] 104 ITR 347 to hold that implicit in that decision was the conclusion that the authorised officer has power to pass a prohibitory order under section 132(3) in respect of the amount lying in a bank. Thus, this authority in fact supports the case of the petitioners. However, in the present case there is no written order issued by respondent No. 3 to the bank to encash the FDRs and hand over the proceeds to her. Thus, irrespective of the fact whether it could be done or not the seizure by an oral order would be without jurisdiction. However, having perused the material produced by respondent No. 3 in connection with search proceedings of the Anand group and the irregularities in the bank records we are satisfied that the action of respondent No. 3 in encashing the FDRs was guided by her concern to protect the interest of the Revenue on a bona fide misunderstanding of law and we are sure that she will be more careful in future and not give such....