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Sec. 226 of Income Tax Act, 1961 – Recovery of Tax – Recovery from garnishee bank done in a manner depriving the interest of the assessee and without following the guidelines which ought to have been followed, thus, revenue directed to refund the amount to assessee.
Facts: Notice of attachment and recovery for realization of amounts due from the assessee Bank was under challenge in the writ petition. Contention of the petitioner was mainly that, the assessment made with respect to the amount sought to be recovered through Ext.P7 was under challenge in an appeal and that the recovery steps from the garnishee was initiated without taking into consideration of pendency of the appeal and the stay petition.
Held, that attachment and recovery was effected at a great haste, without taking into consideration of the parameters. Further, the issue pertaining to liability of the assessee bank for payment of income tax, remains now settled through the decision of a Full Bench of this court in Mavilayi Service Co-operative Bank vs. CIT 2019 (2) KLT 597. It is held therein that, by the reason of sub-section (4) of section 80P, the AO has to conduct an enquiry into the factual situations with respect to the activities of the society, in order to satisfy himself to the conclusions arrived at and also as to whether the benefits under section 80 can be extended or not. Recovery from the garnishee bank has been done in a manner depriving the interest of the assessee and without following the guidelines which ought to have been followed in the matter of garnishee attachment and recovery. Therefore, writ appeal is disposed of by directing the revenue make refund of the amount to the assessee society, in case the assessee society furnishes Bank Guarantee to the tune of the entire amount recovered, to the satisfaction of the first respondent – ANDOORKONAM SERVICE CO-OPERATIVE BANK LTD. Vs. ITO [2020] 424 ITR 283 (KER)