Case Law Details
Manjulaben Mafatlal Shah Vs Tax Recovery Officer-3 (Bombay High Court)
The writ petition was filed challenging the notice dated 27 May 2024 issued under Section 226(3) of the Income Tax Act, 1961 by the Tax Recovery Officer. Through the impugned notice, the Branch Manager of Bank of Baroda was directed to transfer the money lying in the petitioner’s bank account to the Income Tax Department, effectively attaching the petitioner’s bank account.
The petitioner contended that although she was the wife of a Director of Shri Ram Tubes Private Limited, she had no connection with the company. She stated that she was neither a director, shareholder, nor employee of the company and had never held any such position. The bank account that was attached stood solely in her name. Based on these facts, the petitioner argued that the Income Tax Department had no authority or jurisdiction to attach her personal bank account for the company’s tax liability.
The factual position presented by the petitioner was not disputed by the counsel appearing for the Revenue. It was not the case of the Income Tax Department that the petitioner had ever been a director of Shri Ram Tubes Private Limited or that any income tax liability had arisen against her personally.
The Court observed that the bank account attached by the Department was in the sole name of the petitioner. It held that the Income Tax Department could not attach the petitioner’s bank account merely on the basis that she was the wife of a director of the company. The Court further noted that while the Department might be able to proceed against the petitioner’s husband under Section 179 of the Income Tax Act, that provision would not apply to the petitioner.
On this ground, the Court allowed the writ petition. The notice dated 27 May 2024 issued under Section 226(3) fastening the liability of Shri Ram Tubes Private Limited on the petitioner was quashed and set aside. The Court also directed the respondents to withdraw the notice and refrain from taking any steps pursuant to it.
Additionally, the Court ordered the authorities to vacate the attachment, de-freeze, and release the petitioner’s bank account with immediate effect. The rule was made absolute in these terms, and the writ petition was disposed of without any order as to costs.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Respondents waive service. With the consent of parties, Rule made returnable forthwith and heard finally.
2. The above Writ Petition is filed seeking to quash and set aside the notice dated 27th May 2024 issued under Section 226(3) of the Income Tax Act, 1961 fastening liability of one Shri Ram Tubes Private Limited on the Petitioner. The impugned notice can be found at page 59 of the paper book (Exhibit-D). By this notice, the Branch Manager of Bank of Baroda was informed that whatever money is lying in the account of the Petitioner, namely, Account No.143901000002164, be paid over to the Income Tax Department. In other words, there is an attachment on the said bank account by the Revenue.
3. According to the Petitioner though she is the wife of a Director of Shri Ram Tubes Private Limited, she has nothing to do with the aforesaid company. She is neither a Director nor a shareholder, nor an employee of the said company. According to the Petitioner, she was never a Director of the said company either. Further, the bank account that is attached stands in the sole name of the Petitioner. Once these are the facts, according to the Petitioner, the Income Tax Department has no power or jurisdiction to attach the bank account of the Petitioner and which stands in her sole name.
4. The aforesaid factual position has not been disputed by Mr. Suresh Kumar, the learned advocate appearing on behalf of Respondent No.1. It is not the case of the Revenue that the Petitioner was ever a Director of Shri Ram Tubes Private Limited, and against whom an income tax liability arises.
5. Once this is the case, we are clearly of the view that the Income Tax Department cannot attach the bank account of the Petitioner, and which stands in her sole name, only on the basis that she is the wife of a Director of Shri Ram Tubes Private Limited. Though the Income Tax Department may probably be able to proceed against the Petitioner’s husband by invoking provisions of Section 179, the same is wholly inapplicable to the Petitioner.
6. On this short ground the above Petition succeeds and is allowed in terms of prayer clauses (a) and (b) which reads thus:-
“(a) that this Hon’ble Court may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ, Order or direction, calling for the records of the Petitioner’s case and after going into the legality and propriety thereof, to quash and set aside the notice dated 27.05.2024 issued under section 226(3) of the Act fastening the liability of Shri Ram Tubes Private Limited on the Petitioner.
(b) that this Hon’ble Court be pleased to issue a Writ of Mandamus or a Writ in the nature of Mandamus or any other appropriate Writ, Order or direction, directing the Respondents, its servants, subordinates, agents and successors in office:
i. to forthwith withdraw and/or cancel the notice dated 27.05.2024 issued under section 226(3) of the Act fastening the liability of Shri Ram Tubes Private Limited on the Petitioner.
ii. to forthwith forbear from taking any steps whatsoever pursuant to or in implementation of the notice dated 27.05.2024 issued under section 226(3) of the Act fastening the liability of Shri Ram Tubes Private Limited on the Petitioner.
iii. to vacate the impugned attachment/de-freeze/release the bank account with immediate effect.”
7. Rule is made absolute in the aforesaid terms, and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.
8. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.
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