Page 87 - GSTL_26th March 2020_Vol 34_Part 4

2020 ] BINDAL SMELTING PVT. LTD. v. ADDL. DIR. GEN., DIRECTORATE GEN. OF GST 597
is clear that this power should be exercised by the Assessing Officer only if
there is a reasonable apprehension that the assessee may thwart the ulti-
mate collection of the demand that is likely to be raised on completion of
the assessment. The power of attachment under this Section is in the nature
of attachment before judgment under the Code of Civil Procedure. It is a
drastic power. It should, therefore, be exercised with extreme care and cau-
tion. It should not be exercised unless there is sufficient material on record
to justify the satisfaction that the assessee is about to dispose of the whole
or any part of his property with a view to thwart the ultimate collection of
the demand. Moreover, attachment should be made of the properties and to
the extent it is required to achieve the above object. It should neither be
used as a tool to harass the assessee nor should it be used in a manner
which may have an irreversible detrimental effect on the business of the as-
sessee. Attachment should be made as far as possible of immovable proper-
ties if that can protect the Revenue. Attachment of bank accounts and trad-
ing assets should be resorted to only as a last resort. In any event, attach-
ment under Section 281B should not be equated with attachment in the
course of recovery proceedings.”
8.4 In exercise of power conferred by Section 226(3) of Income-tax Act,
1961 Assessing Officers time and again attached cash credit or over draft or loan
account of the defaulter assessee. Matter time to time came up for consideration
before High Courts and it was held that cash credit or over draft or loan account
cannot be attached because there is no balance of assessee. Gujarat High Court in
the case of Kaneria Granito Ltd. v. Assistant Commissioner of Income Tax [2016] 241
Taxman 315 (Gujarat) after noticing law enunciated by different High Courts has
quashed attachment notice issued under Section 226 of Income-tax Act, 1961 to
the Allahabad Bank to pay the department Rs. 5.86 Crore even though accounts
maintained were cash credit or term loan accounts. The relevant findings are ex-
tracted below :
“4 Having heard Learned Counsel for the parties and having perused the
materials on record we may notice that Section 226 of the Act pertains to
other modes of recovery. Under sub-section (1) of Section 226, where no
certificate, as mentioned in Section 222 of the Act, is drawn up, the As-
sessing Officer may recover the tax by one or more of the modes provided
in this section. The portion of Section 226, which is relevant for our purpose, reads
as under :
“(3) (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 as-
sessee in respect of arrears or the whole of the money when it is equal
to or less than that amount.
(ii) A notice under this sub-section may be issued to any person
who holds or may subsequently hold any money for or on account of
the assessee jointly with any other person and for the purposes of this
sub-section, the shares of the joint holders in such account shall be
presumed, until the controversy is proved, to be equal.
(iii) … … … … …
(iv) Save as otherwise provided in this sub-section every person to
whom a notice is issued under this sub-section shall be bound to
comply with such notice and in particular where any such notice is
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