Searching Case Laws & Precedent on Legal Query!
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query!
Scanned Judgements…!
Multiple sources (e.g., 2024 0 Supreme(Gau) 515, 2025 Supreme(Online)(NCLT) 993, 2021 Supreme(Online)(MAD) 22314, 2022 Supreme(Online)(Mad) 86420, 2022 Supreme(Online)(MAD) 14131,
2018 and W.M.P.No.23298
) confirm that Section 226(3) is the statutory provision empowering the Income Tax Department to attach bank accounts and enforce recovery of tax dues.Main Points and Insights
The attachment is subject to certain procedural safeguards, but generally, banks are required to act in compliance with the notice.
Analysis and Conclusion The set-off or attachment of bank amounts directed by the Income Tax Department is explicitly authorized under Section 226(3) of the Income Tax Act, 1961. This provision provides the legal basis for the Department to enforce recovery by instructing banks to attach or withhold funds, and banks are bound to comply with such statutory notices. The courts have consistently recognized the validity of these actions, reaffirming that the Department's instructions under Section 226(3) are legally enforceable, and the banks' compliance is mandated by law.
In summary:Bank set-off against amounts directed to be attached by the Income Tax Department under Section 226(3) is permissible under Section 226(3) of the Income Tax Act, 1961.
In the complex world of , , empowers the Income Tax Officer (ITO) to attach bank accounts, (FDRs), and other held by third parties like banks to recover outstanding tax dues from assessees. But what happens when a bank wants to the attached amount against its own dues from the assessee? A common query arises: Under which Provision of Income Tax Act 1961 can Bank the Amount Directed to be Attached by the Income Tax Officer under Section 226(3) of the Income Tax Act?
This blog post delves into the legal framework, judicial interpretations, and practical implications, drawing from key provisions and case laws. While Section 226(3) governs attachments, banks' set-off rights often stem from and banking laws, balanced against powers. Note: This is general information and not specific legal advice; consult a professional for your situation.
Section 226(3) allows the ITO to issue notices to banks and other third parties to attach monies or prohibit payments to the assessee if tax dues remain unpaid. Key sub-clauses include:
The term due is interpreted broadly by courts to include amounts payable on a future date, such as maturing FDRs, provided the relationship subsists 1999 0 Supreme(Kar) 649. Attachments can occur even before maturity, streamlining .
While the ITO's notice under Section 226(3) directs attachment, banks retain statutory rights to attached amounts against their own claims. Courts recognize:
In practice, when banks receive like ITBA/COM/F/17/2019-20/1024454283(1) dated under Section 226(3), they comply but may invoke set-off rights 2025 Supreme(Online)(SCDRC) 32569 2025 Supreme(Online)(SCDRC) 31566.
Courts have upheld attachments before FDR maturity if the amount is due and the debtor-creditor tie persists. For instance:
Judicial rulings clarify that bank liens are not overridden by attachments:
In consumer disputes, banks remitting funds per Section 226(3) notices are protected: Bank cannot afford to disobey orders of
. Similarly, where a bank remitted Rs.39,403 after notice, and the complainant received a copy, no deficiency was found
Vidyanand Co-operative Bank Ltd. VS Shrivallabh Radhakisan Karwa
.proceedings highlight tensions:
2018 and W.M.P.No.23298
..
.
When Department attachments clash with bank liens, courts prioritize statutory rights unless overridden. Taxpayers should:
Under of the , the ITO can direct banks to assessee dues, but banks' independent set-off rights under banking statutes like general liens provide a counterbalance 2016 0 Supreme(Guj) 1343 1999 0 Supreme(Kar) 649. Judicial precedents affirm if criteria are met, while protecting banks from liability for compliance
2025 Supreme(Online)(SCDRC) 32569.
In essence, while Section 226(3) drives , banks navigate set-offs via their legal arsenal, ensuring fairness. Taxpayers facing attachments should act swiftly, armed with these insights.
Disclaimer: This post synthesizes general legal principles from referenced cases 2016 0 Supreme(Guj) 1343 1999 0 Supreme(Kar) 649 1999 0 Supreme(Kar) 648 and is for informational purposes only. Seek tailored advice from a tax expert.
2018 and W.M.P.No.23298
Vidyanand Co-operative Bank Ltd. VS Shrivallabh Radhakisan Karwa
of Rule 68B of the Schedule II of the Income Tax Act, 1961. ... The respondent authority by an order dated 20.12.2018, notice of attachment of the property in question was issued under Section 226(3) of the Income Tax Act, 1961 and on the same day i.e. on 20.12.2018, by another order prohibited and ....
the Income Tax Department under section 226(3) of the Income Tax Act before the CIRP date. ... It is averred that, the Respondent had received a garnishee order under Section 226(3) of the Income Tax Act, 1961 from the Office of....
226(3) of the Income Tax Act, 1961. ... Since Section 158 BD of the Income Tax Act, 1961, proceedings were pending for the Block Assessment Period from 01.04.1988 to 15.12.1998, all transfers are void under Section 281 of the Income Tax #HL_START....
ITBA/COM/F/17/2019- 20/1024454283(1) dated 30/01/2020 of attachment under section 226(3) of Income Tax act 1961 for the PAN No. ... Under section 226(3) of the Income Tax Act 1961, and by doing so were following direct written instructions from t....
ITBA/COM/F/17/2019- 20/1024454283(1) dated 30/01/2020 of attachment under section 226(3) of Income Tax act 1961 for the PAN No. ... Under section 226(3) of the Income Tax Act 1961, and by doing so were following direct written instructions from t....
However, the respondent attached the Bank Account of the petitioner vide Notice dated 26.03.2018 bearing reference PAN No.ACGPD9374E/W-1(4)/SLM under Section 226(3) of the Income Tax Act, 1961. ... Tax, Salem and to direct the respondent to waive off a sum of Rs.28,61,596/- towards....
226(3) of the Income Tax Act, 1961 for the Assessment Years 2017-2018 and 2018-2019 in DIN and Notice Years 2017-2018 and 2018-2019 in DIN and Notice Tax Act, 1961. ... 220(6) of the Income Tax Act, 1961 and therefore submits th....
ITBA / RCV / S / 226(3)_1 / 2023-24 / 1059839698 (1) dated 18/01/2024 issued under Section 226(3) of the Income Tax Act 1961 by the 1st Respondent to the 2nd Respondent and quash the same. ... For Petitioner : Mr.R.Swarnavel For R1 : Dr.B.Ramaswamy, Senior Standing Counsel ORDER A bank attachment notice under #HL_S....
) of the Income Tax Act, 1961, subject to the petitioner paying/depositing 20% of the disputed tax to the credit of the Government. ... 6.Considering the fact that all the bank accounts of the petitioner have been attached, I am inclined to pass an interim order for vacating the impugned attachment notices under Section 226(#HL_START....
in PAN:AXSPK 2172N/W- 2/2017-18 dated 08.12.2017 and quash the impugned notice / order O R D E R The lis on hand is filed, challenging the Notice issued under Section 226(3) of the Income Tax Act, 1961 [hereinafter referred to as 'Act] in proceedings dated 08.12.2017. ... Thus, the Assessing Officer said that the p....
9. The letter dated 21st December 2017 by the Petitioner addressed to the Branch Manager, Punjab National Bank, Nana Peth, Pune (wherein its bank accounts have been attached) reads as under : To, The Branch Manager Punjab National Bank Nane Peth, Pune Madam, Sub. : Attachment of bank accounts. This nonpayment was on account of the fact that the Bank Accounts of the petitioner were attached by the Income Tax Department under Section 226(3) of the Income Tax Act, 1961. However,....
Income Tax Department has issued notices to your Bank under section 226(3) of Income Tax Act and attached our Bank accounts with your Bank. The matter was heard on 18/12/2017 and 19/12/2017 and accordingly we have filed affidavit specifying the details of Bank accounts with your branch where the amounts are likely to be received from Social Welfare Department. We have already filed writ petition before the Hon'ble Bombay High Court seeking directions for stay of demand raised....
The OP informed the complainant that in compliance of the notice dated 21.10.2011 under Section 226(3) of Income Tax Act, 1961, INR.1,55,047.06 had been remitted from the said account. On 21.10.2011, the Income Tax Department again issued another notice under Section 226(3) of the Income Tax Act, 1961, directing the Bank to attach the A/c No.00891930002490, another account, as a measure of recovery of income tax dues. 1,03,22,548/- from the single name account on 21.04.2011.
An amount of Rs.39,403 which was lying with the bank was belonging to the respondent. What is pertinent to note is the fact that request letter sent to the Bank by the income tax authorities under Section 226(3) of Income Tax Act, 1961 was also sent simultaneously to the respondent. Notice was issued by income tax authorities under Section 226(3) of Income Tax Act, 1961 asking the bank to transmit the amount of Rs. 39,403 from the account of respondent. So, ....
The Tribunal held that the receipt did not have the character of income and the provisions of section 10(3) of the Act were not applicable to the receipt. According to the facts arising in that case, the assessee company engaged in trading, Investment and money-lending business, negotiated for the sale of a house property belonging to it and, as the sale could not be completed, forfeited a certain sum deposited by the intending purchaser with the assessee. The Appellate Assistant Commissioner ....
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