Kundlas Loh Udyog Vs Union of India and others (Himachal Pradesh High Court)
Himachal Pradesh High Court held that attachment of account like Cash Credit or Overdraft by exercising powers conferred under section 226(3) of the Income Tax Act untenable as bank doesn’t become a debtor.
Facts- The petitioner deals in the work of Iron and Steel for which it purchases raw material and thereafter manufactures the final products as per the demand. As per the petitioner, it has the bank accounts in the nature of “Over Cash Credit” (OCC Account)/ “Cash Credit (CC)” with HDFC bank (respondent No.2) and YES bank (respondent No.3) with the huge debit balance.
On 31.05.2023, respondent No.1 served a notice u/s. 143(2) of the Income Tax Act 1961 (for short the ‘Act’) which was duly replied by it. Later on, on 30.12.2023, a show cause notice was issued to the petitioner proposing a huge addition of Rs 237.53 Crores, which according to the petitioner, was 90.43% of sales of the petitioner and around 2.5 times of its assets. Thereafter, in consequence of the same, an assessment order u/s. 143 (3) of the Act was passed on 31.03.2023 along-with a notice of demand u/s. 156 of the Act in Form No. 7, in which, the respondents demanded a sum of Rs. 17,07,97,812/- from the petitioner. The petitioner assailed this demand and this Court granted interim stay with regard to the issue of the “freight income” vide order dated 12.06.2024.
