- (1.) We have heard Sri S.P.Gupta, the learned senior counsel assisted by Sri R.P.Agarwal, the learned counsel for the petitioner, Sri Bharatji Agarwal, the learned senior counsel assisted by Sri Govind Krishna for the Income Tax Department and Sri Rakesh Ranjan Agarwal, the learned senior counsel assisted by Sri Suyash Agarwal for the private respondent M/s Rich Capital and Financial Services Limited.
(2.) The facts, which has been culled out from the pleadings of the parties is, that the petitioner is a Public Limited Company incorporated under the Companies Act and is engaged in the business of Financial Services. Initially the registered office of the Company was situated at Kanpur, but, w.e.f. 1.3.2006 the registered office was shifted to Varanasi and, since then for the assessment years 2007-08 onwards, the income tax returns were being filed with the Income Tax Department at Varanasi.
(3.) It transpires that M/s Rich Capital and Financial Services Ltd. became a defaulter of income tax dues with the Income Tax Department and that a demand of approximate Rs.3.2 Crores was raised against the said assessee. The said assessee alleged that the petitioner is a debtor and owed to him a sum of Rs.1.55 Crore. On the basis of this assertion made by the said assessee to the Tax Recovery Officer, it transpires that the Tax Recovery Officer issued a notice dated 22.11.2007, under Section 226(3) of the Income Tax Act (hereinafter referred to as "the Act") to the petitioner indicating that certain amount was due from the garnishee (i.e. the petitioner) to the assessee and accordingly, required the garnishee to pay within the time specified in the notice so much of the amount as was sufficient to pay the amount due from the assessee in respect of arrears of tax. This notice was alleged to have been sent at the previous registered office of the petitioner at Kanpur, which was not received by the petitioner. Since no reply was received from the petitioner nor any amount was deposited, the Tax Recovery Officer issued a notice dated 17.3.2008 treating the assessee in default in respect of the amount specified in the notice holding that further proceedings would be taken against the petitioner for realisation of the amount as if it were an arrears of tax due from it in the manner provided under Sections 222 to 225 of the Act. It further transpires, that the Tax Recovery Officer attached 4,24,910 equity shares of Rs.10/- each of Jhunjhunwala Vanaspati Ltd. from the Demat Account of the petitioner held with Karvi Stock Broking Ltd., which was subsequently transferred to the Demat Account of the Tax Recovery Officer. The petitioner also had a Savings Bank Account with the ICICI Bank in which there was a balance of Rs.28,988.78. The petitioner contended that the said amount was also attached and transferred to the Tax Recovery Officer's Account.;