ILABEN RAMANLAL ZARIWALA Vs. UNION OF INDIA

JUDGEMENT

(1.) In this petition under Art. 226 of the Constitution the petitioner has challenged the action of the State Bank of India Surat Branch in not paying to her an amount of Rs. 56000.00 in exchange for high denomination notes for which originally the Ordinance called The High Denomination Bank Notes (Demonetisation) Ordinance 1978 was promulgated by the President and subsequently the Ordinance having been replaced by the High Denomination Bank Notes (Demonetisation) Act 1978 The case of the petitioner is that she is the sole proprietor of the firm called Shreejee Diamond Industries and she carries on business at Mahidharpura Zaveri Bazar Surat. According to her the petitioners business is of diamond cutting and she earns livelihood from the income thereof. The petitioner according to her is an income-tax payer and has filed income-tax return for the Assessment Year 1978-79 ending 31st March 1978. According to the petitioner she received a demand draft for Rs. 65000.00. This demand draft was issued on December 20 1977 and the same was negotiated by her with one Vijaykumar Champaklal Choksi of Surat on December 22 1977 After taking the discount Vijaykumar Choksi paid the amount of Rs. 65000.00 in high denomination notes to the extent of Rs. 56000.00 and the balance of the amount was paid to her in notes of Rs. 100.00 and smaller denomination notes. On January 19 1978 the petitioner deposited the amount of Rs. 56000.00 along with the declaration of deposit with the State Bank of India Surat Branch and the petitioner had also notified the State Bank of India Surat Branch about her own personal bank account into which the State Bank of India was requested to pay the amount of Rs. 56000.00. Before the State Bank of India in exchange for the high denomination notes paid the amount of Rs. 56000.00 to the petitioners account a prohibitory order under sec. 281 of the Income-tax Act was passed by the Income-tax Officer Circle 11 (Revenue) Surat directing the Agent State Bank of India not to pay the amount of Rs. 56000.00 to the petitioner or to her account. This power of provisional attachment under sec. 281-B was exercised by the Income-tax Officer who is the fourth respondent herein as the assessment proceedings were pending and intimation was sent to the State Bank of India stating that because an order under sec. 281-B had been passed against the petitioner it ws ordered that the petitioner was prohibited and restricted until after the order of the Income-tax Officer from receiving from the State Bank of India the sum of Rs. 56030.00 declared under the High Denomination Notes (Demonetisation) Ordinance. It is the case of the petitioner as urged at the stage of arguments before us provisional attachment must cause to have effect after the expiry of a period of six months from the date of the order made under sub-sec. (1) of sec. 281-B but under the proviso the Commissioner may for reasons to be recorded in writing extend the aforesaid period of six months by such further period or periods as he thinks fit so however that the total period of extension shall not in aay case exceed two years. Miss Shah on behalf of the petitioner urged before us at the time of hearing that on the last day of the period of six months contemplated by sec. 281-B(2) of the Income-tax Act the Income-tax Officer Circle II-D has purported to pass another order directing the Agent of the State Bank of India Surat that the amount of Rs. 56000.00 should be retained with the State Bank of India until further order of the Income Tax Officer and until further orders this amount should not be paid to the petitioner and this order of extension of time was granted on September 26 1978 Now it is to be borne in mind that extension can only be granted by the Commissioner of Income-tax under the proviso to sec. 281-B(2)- In this case we have been shown an order passed by the Commissioner of Income-tax Baroda on September 26 1978 or before that date purporting to approve the proposal of the Income-tax Officer to extend the period of provisional attachment under sec. 281-B(1) for a further period of six months. There are no reasons recorded in writing for extending original period of six months by a further period of six months. The proviso to sub-sec. (2) of sec. 281-B contemplates that it is for the Commissioner to pass an order of extension of time and that too for reasons to be recorded in writing.

(2.) It is urged before us that on merits the petitioner does not deserve any sympathy from the Court and that on merits the case of the petitioner as regards the income-tax proceedings is so bad that no orders should be passed on this Special Civil Application. It is urged in the alternative that by his approval of the proposal put up by the Income_ tax Officer on September 16 1978 asking for an extension of time the Commissioner did pass the order. The proposal form as completely filled in has been shown to us and a copy of that proposal form put up by the Income-tax Officer and the orders passed thereon has been kept on the record. of the case. Columns Nos. 1 to 7 do not deal with extension of the period of attachment under sec. 281-B of the Income-tax Act. Column Mo. 8 is in these terms: Whether this is fresh proposal or for extension of time. If it is for extension of time No. and date of approval granted for the first time should be mentioned. And against this column the Income-tax Officer has written: The period of six months expires on 24 As the enquiry is still pending extension may be granted for further six months. Approval under sec. 281-B was granted by the C.I.T. Guj. II by his letter No. Conf. Hq. 182/B-17/78 dt. 24-3-78. There is nothing else mentioned on the face of the order as to why the Commissioner in his discretion thought it fit that the period of attachment should be extended by a further period of six months. Column No. 9 provides for Inspecting Assistant Commissioners remarks and from the entry against that column it appears that the Inspecting Assistant Commissioner made s certain remarks by another document which is not before us on September 18 1978 and the order of the Commissioner of Income-tax is that the proposal is approved. But even after approving the proposal it is for the Commissioner of Income-tax to pass the order for extension. From the letter addressed to the Agent State Bank of India Surat on September 26 1978 a copy of which is also kept on the record of the case it does not appear anywhere that the order of extension was passed by the Commissioner of Income-tax. This is an intimation sent by the Income-tax Officer concerned the fourth respondent herein to the Agent State Bank of India Surat that the period of attachment was to continue till further orders of the Income-tax Officer. How the Income-tax Officer could have sent this intimation that the period of attachment was extended until further orders is difficult to understand and appreciate. However it is obvious that if the documents which are shown to us do not amount to an order of extension of time passed by the Commissioner of Income-tax after recording in writing his reasons for the extension of time the attachment cannot continue after 26th September 1978 because the period of six months contemplated by sec. 281-B (2) came to an end on September 26 1978 In our opinion though the proposal was approved and to that extent it is possible to say by stretching the language that the Commissioner decided that the period of attachment should be extended yet there is an order by the Commissioner himself that the period of provisional attachment should be extended by a further period of six months. The only possible reason for extension of time which emerges from the documents before us is As the enquiry is still pending. The Commissioner does not appear to have found out why the inquiry was still pending and how long the inquiry was likely to take. The Commissioner does not seem to have applied his behind to any reasons for the extension of the period of attachment for a further period of six months beyond this ipse dixit of the Income-tax Officer concerned that the inquiry was still pending. In our opinion this is a mere apology for reasons to be recorded in writing and not the reasons which are contemplated by the proviso to sec. 281-B(2). Under these circumstances the only conclusion that we could reach is that appropriate order for extension of the period of provisional attachment as contemplated by the proviso to sec. 281-B(2) has not been passed in the instant case (1) by the officer concerned and (2) in the manner in which and after satisfying the conditions-precedent which are prescribed by the proviso. Under these circumstances it is obvious that the period of provisional attachment expired by the efflux of time on September 26 1978 We are not concerned in the present case with the merits or demerits of the behaviour and the income-tax payers image. All that we are concerned is whether there is a legal and valid order of attachment in operation and it is obvious that if there is no proper valid and legal order in existence it is obligatory on the State Bank of India the third respondent herein to pay to the petitioner the amount of Rs. 55033/ in exchange for the high denomination notes.

(3.) Miss Shah for the petitioner says that the petitioner will open a new savings bank account with Bank of Baroda Vania Sheri Branch Surat tomorrow and that the State Bank of India should be asked to pay the amount of Rs. 5600 to the Bank of Baroda Vania Sheri Branch Surat for being credited to that newly opened account. In the view that we take about the extension of the period of attachment not being valid it is obvious that a mandamus must go to the State Bank of India Surat Branch directing them to pay the amount of Rs 56003/- to the newly opened savings bank account of the petitioner with the Bank of India Vania Sheri Branch Surat. However in order to see that no complications may arise in future and in order to see that proper steps at all levels can be taken the Bank of Baroda Vania Sheri Branch. Surat is directed not allow the petitioner to operate as against this amount of Rs 56000/- before January 1 1979 Miss Shah on behalf of the petitioner undertakes that the petitioner will not operate upon the newly opened savings bank account so far as the amount of Rs. 56003.00 is concerned Bofors January 1 1979