SAHUKARA BANK LIMITED Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE petitioner, Sahukara Bank Ltd., Ludhiana, had some branches in Pakistan before partition. As a result of partition, the bank was faced with great difficulties, with the result that a scheme under section 153, Indian Companies Act, was presented to this court which was sanctioned in due course. Some Muslim depositors had also dealings with this bank and one Mohammad Akram of Ikram-Ullah and Sons had an account with the bank at Ludhiana in the name of Messrs. Army Stores Supplying Company. It is common case of the Parties that this firm had a deposit of Rs. 10,266-7-6 as on January 1, 1948, with this bank. As a result of partition, the Muslim customers migrated to Pakistan. It appears that this customer owed to the income-tax department a certain amount on account of tax. In 1959, the Income-tax Officer, Ludhiana, wrote to the bank enquiring if there was any account with them of Mohammad Akram of Ikram-Ullah and Sons in the name of Army Stores Supplying Company. THE bank replied in December, 1959, that they had one account in 1948, which, along with the accounts of other Muslim depositors, who had migrated to Pakistan, had been transferred to Lyallpur books of the bank and they had no account in the books of the bank at Ludhiana. On December 9, 1960, the Income-tax Officer sent a notice to the bank under section 46(5A), Indian Income-tax Act, 1922, requiring the bank to deposit in the Government account of the assessee, Messrs. Army Stores Supplying Company, the amount of Rs. 10,000 or more standing to the credit of the assessee with the bank. It appears that some further correspondence passed between the parties and the manager of the bank, who was summoned under section 37 of the Indian Income-tax Act. In January, 1962, a tax recovery certificate is stated to have been issued by the Income-tax Officer, F ward. Ludhiana, for the recovery of Rs. 12,104.37 nP. to the petitioner bank as arrears of hand revenue in respect of the tax due from Shri Mohammad Akram of Messrs Army Stores Supplying Company, Ludhiana. It is against these proceedings that the present petition has been presented by the bank under articles 226 and 227 of the Constitution.

(2.) THE petitioners submission strongly pressed before me on the authority of P. Rajeshwaramma v. Income-tax Officer, Nellore, is that, once the bank denied that any money was due from it to the assessee, the Income-tax authorities ceased to have any jurisdiction to proceed under section 46(5A) of the Indian Income-tax Act, 1922, whereas, on behalf of the revenue, it has been canvassed with equal force that on the banks own showing this paper transaction of transfer is not genuine and is a mere sham. Neither has the amount been paid to the customer nor is it being paid to the revenue on behalf of the assessee. THEre being no law under which the bank could have transferred this amount to Pakistan and indeed, in fact and in substance, the amount having not been transferred, the revenue is entitled to proceed under section 46(5A). THE learned counsel has tried to get assistance from a decision of the Supreme Court in Delhi Cloth & General Mills v. Harnam Singh.

(3.) THE Income-tax Officer followed up the matter by various remainders including the one dated June 26, 1961. In reply thereto, the Manager of the bank wrote to the Income-tax Officer as follows :