The Karnataka High Court in the case of Mrs. Beena Muralidhar v. Tax recovery officer held that wherein a recovery proceeding, no notice was issued to the joint holder of bank account for lien towards the payment of liability, which is a sine qua non for the recovery of tax as provided under Section 226 of the Act, impugned notice stood quashed.
The petitioner is the wife of Sri B. Muralidhar, appointed as part-time director of the Company. The Company was assessed by the respondent and held to be liable to pay Rs 29,61,27,320 for which a notice has been issued to the petitioner’s husband for marking the said bank account towards lien for arrears of tax liability of the husband of the petitioner.
The petitioner contends that she jointly holds Savings Bank account with her husband and is the primary account holder of the said account and that no notice was issued to her in terms of Section 226(3)(iii) of the Income Tax Act on her.
The Single Judge bench of Justice S. Sujatha held that “it is discernible that no notice issued under sub-section 3(ii) was forwarded to the petitioner which is sine qua non for recovery of tax as provided under Section 226 of the Act. The mandatory requirement is not complied with by revenue, in terms of Section 226(3)(iii) of the Act. Hence, the notice impugned dated 12.03.2019 at Annexure – A deserves to be quashed and is accordingly quashed.”