Shree Aashraya Souhard Credit Society Ltd V. Assistant Commissioner of Income Tax Central Circle -1 and Assistant Director of Income Tax (INV)

WP/104395/2014

AI Insights

The case involves Shree Aashraya Souhard Credit Society Ltd., which was issued garnishee notices by the Income Tax Department following a search and subsequent assessment of undisclosed income linked to Shri Ramesh Motilal Chindak and his family. The Department traced investments made by the assessees in a cooperative society, which in turn had deposited these amounts in the petitioner-Society. The Department issued notices under Section 226(3) of the Income Tax Act, demanding payment of the amounts held by the petitioner on behalf of the assessees. The petitioner contested the notices, arguing that the fixed deposits were not due for payment as they had not matured. However, the court found that the petitioner had a subsisting relationship as a creditor to the assessee and was required to comply with the notices, treating the petitioner as an assessee in default.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 672153 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 08-04-2014
• Assessment Year: misc
• Other Referred Cases: UNIT TRUST OF INDIA VS. B.M.MALANI AND OTHERS, VYSYA BANK LTD., VS. JOINT COMMISSIONER OF INCOME TAX AND ANOTHER
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: Y V RAVIRAJ
• Assessee Lawyers: C V ANGADI
• Keywords: Assessment; Fixed Deposit; Income Tax; Tax Recovery; Undisclosed income; Garnishee Orders
• Section: 201; 132; 225; 222; 226(3)(i); 226(3)(x)

Judgement Text

": 1 : IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 8TH DAY OF APRIL, 2014 BEFORE THE HON’BLE MR.JUSTICE ARAVIND KUMAR W.P.Nos.104395-399/2014 & 104432-433/2014 (IT) BETWEEN SHREE AASHRAYA SOUHARD CREDIT SOCIETY LTD HAVING ITS H.O. AT GURUPRASAD BUILDING, 760, KALMATH ROAD, BELGAUM AND ONE OF ITS BRANCHES AT 107 A & B, 1ST FLOOR, ARJUN SANKUL, DANE GALLI, SHAHAPUR, BELGAUM HEREIN R/BY ITS MANAGER MR VINAYAK GOPAL ASUKAR ..... PETITIONER (BY SRI C.V.ANGADI, ADV.) AND 1. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -1 SARAF COLONY, SHRADDHA BUILDING, KHANAPUR ROAD, TILAKWADI, BELGAUM 2. THE ASSISTANT DIRECTOR OF INCOME TAX (INV) 4TH FLOOR, LAXMI COMPLEX, SADASHIVNAGAR, BELGAUM ..... RESPONDENTS (BY SRI Y.V.RAVIRAJ, ADV.) : 2 : THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH THE GARNISHEE ORDERS ISSUED BY THE RESPONDENT NO.1 UNDER SEC.226(3) (X) OF THE IT ACT FOR THE ASSESSMENT YEARS 2006-07 TO 2012-13 DTD.10.03.2014 (ANNEXURE-A), FOR THE ASSESSMENT YEAR 2012-13 DTD.10.03.2014 (ANNEXURE-A1), FOR THE ASSESSMENT YEAR 2006-07 TO 2012-13 DTD.10.03.2014 (ANNEXURE-A2), FOR THE ASSESSMENT YEAR 2006-07 TO 2012-13 DTD.10.03.2014 (ANNEXURE-A3), FOR THE ASSESSMENT YEAR 2006-07 TO 2012-13 DTD.10.03.2014 (ANNEXURE-A4). THESE WRIT PETITIONS COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER On account of search proceedings conducted against one Sri Ramesh Motilal Chindak and family members in exercise of powers under Section 132 of the Income Tax Act, 1961, (for short ‘the Act’) block assessment came to be made and assessment orders came to be passed accordingly. On tax amount being quantified, demand has been raised against the assessee. During the course of assessment proceedings, it was noticed by the Department that family members of the assessee had floated a Co- operative Society known and called as Shivaganga Multi- : 3 : purpose Co-operative Society Limited and the assessees had invested their undeclared income in the said Co- operative Society which inturn had invested the amounts in petitioner- Shree Aashraya Souhard Credit Society Ltd., and as such Garnishee notice under Section 226 (3) came to be issued by the Department to the petitioner-Society on 12.02.2014 vide Annexure-G1. Same was not replied by the petitioner. Hence, one more notice came to be issued on 28.02.2014 Annexure-H calling upon petitioner-Society to show cause as to why it should not be treated as an assessee in default as per Section 226 (3) (x) of the Act and as to why further proceedings should not be initiated for realisation of the amount as if it was an arrears of tax due from the petitioner-Society itself by treating it as assessee in default. Said notice came to be replied by the petitioner by reply dated 01.03.2014 which was communicated to the respondent by registered post : 4 : acknowledgment due and it was duly served on the respondent on 10.03.2014. However, by the time reply could be received, respondent had already proceeded to pass an order under Section 226 (3) (x) by treating petitioner as a deemed defaulter for not complying with the demand made under notice issued under Section 226 (3) of the Act. Accordingly, Garnishee notices came to be issued as per Annexures-A to A4 and demand notices was raised as per Annexures-A-5 to A-9. Immediately, thereafter, petitioner has submitted a representation on 20.03.2014 to respondent requesting the respondent not to treat petitioner-Society as a deemed defaulter and undertaking to pay the amounts due to its depositors (assessees) in respect of which it has received the Garnishee notices immediately after maturity of deposits or on the dates when fixed deposits become due and payable to them and as such, petitioner-Society requested the respondent to treat said : 5 : representation as an application for rectification of the order passed against it by respondent whereunder petitioners had been held as assessee in default. Said representation was not considered by respondent. A communication has been sent to the petitioner on 24.03.2014 Annexure-K calling upon petitioner to comply with the Garnishee notices Annexures-A to A4. As such, petitioner is before this Court. 2. The grievance of the petitioner as urged by Sri C.V.Angadi, learned counsel appearing for the petitioner-Society in these writ petitions is Fixed Deposits (for short FDRs) in respect of which Garnishee notices have been issued is yet to mature or they have not become due and premature payment would not arise and it is not liable to pay the proceeds of the fixed deposit before the maturity period and as such, petitioner-Society cannot be treated as a creditor of the assessee to enable the Department to issue Garnishee : 6 : notice. In support of his submission, he has relied upon the judgment of the Hon’ble Apex Court in the case of UNIT TRUST OF INDIA VS. B.M.MALANI AND OTHERS reported in 2007 (212) CTR 425 (SC). 3. Per contra, Sri Raviraj, learned counsel appearing for the respondent-Department would contend that when undisputedly the Department has concluded assessment proceedings against the assessees, Tax Recovery Officer would get jurisdiction to recover tax demanded and in the instant case, the Assessing Officer having found that assessees’ undisclosed income had been invested in Shivaganga Multi-purpose Co-operative Society which in turn had invested these amounts in Aashraya Souhard Credit Society Ltd., namely the petitioner-Society, Recovery Officer was well within his bounds to recover the tax due from assessee by issuance of notice under Section 226 (3) inasmuch as depositor or the assessee would be entitled to seek for : 7 : premature withdrawal of fixed deposits and on account of Assessing Officer or the Tax Recovery Officer stepping into the shoes of the assessee, it cannot be contended that Assessing Officer will have to wait till maturity of the fixed deposits and thereafter invoke provision of Section 226 (3) since their fixed deposits had already been attached by the Department by issuance of prohibitory orders at the time of conducting search proceedings under Section 132 against the petitioner- Society and as such Tax Recovery Officer is well within his bounds to recover the amounts due to the assessee from Society by treating the petitioner-Society as an assessee in defaulter. In support of his submission, he has relied upon the judgment of a co-ordinate bench of this Court in the case of VYSYA BANK LTD., VS. JOINT COMMISSIONER OF INCOME TAX AND ANOTHER reported in 2000 (241) ITR 178. : 8 : 4. Having heard the learned advocates and on perusal of case papers, I am of the considered view that it would be necessary to extract relevant provision of Section 226 of I.T. Act for better appreciation of contention raised by learned advocates and they read as under: Section 222.Other modes of recovery- (1) Where no certificate has been drawn up under section 222, the Assessing Officer may recover the tax by any one or more of the modes provided in this section. (2) Xxx xxx (3) (i) the Assessing Officer or Tax Recovery Officer may, at any time or from time to time, by notice in writing require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee to pay the Assessing Officer or Tax Recovery Officer either forthwith upon the money becoming due or being held or at or within the time specified in the notice not being before the money : 9 : becomes due or is held) so much of the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that amount. vi) Where a person to whom a notice under this sub-section is sent objects to it by a statement on oath that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on accoutn of the assessee, then, nothing contained in this sub-section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the Assessing officer or Tax Recovery Officer to the extent of his own liability to the assessee on the date of the notice, or to the extent of the assessee's liability for any sum due under this Act, whichever is less. x) if the person to whom a notice under this sub-section is sent fails to make payment : 10 : in pursuance thereof to the Assessing Officer or Tax Recovery Officer, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were an arrear of tax due from him, in the manner provided in sections 222 to 225 and the notice shall have the same effect as an attachment of a debt by the Tax Recovery Officer in exercise of his powers under section 222. Sub section (3) of Section 226 of the Act provides for the mode of recovery by way of attachment of debts. It authorises the Assessing Officer or Tax Recovery Officer to issue notice requiring a debtor to pay to the Department so much of money due from him to the assessee as is sufficient to pay the amount due by the assessee in respect of arrears of tax. This mode of recovery can be resorted in respect of arrears of tax due by the assessee. Before any notice could be issued : 11 : under 226 (3), it is necessary there should be an order under Section 201 of the Act against the assessee which requires him to pay the tax. It is also necessary that the order should quantify amount of tax to be paid by the assessee. The basis for a notice to be issued under Section 226 (3) is that assessee should be in arrears of tax unless there is an order of assessment against the assessee and a notice of demand, assessee cannot be said to have any tax arrears. The records in the instant case would clearly indicate that after issuing demand notice under Section 156 of the Act to the assessee for the block period 2006-2007 to 2012-13, assessment orders came to be passed on 31.01.2014 and 12.02.2014. Undisputedly, during the course of assessment proceedings, it has been concluded that amounts invested in Shivaganga Multi-purpose Co- operative Society is the undisclosed income of the assessees and said amount invested by the assessees in : 12 : Shivaganga Multi-purpose Co-operative Society has been invested by the said Society in Aashraya Souhard Credit Society Ltd., namely petitioner herein. As such, notice under Section 226 (3) calling upon the petitioner to pay said amount came to be issued. It is not in dispute that an assessment order has been passed against the assessee and the said assessees having deposited the amount in Shivaganga Multi-purpose Co- operative Society and said Society in turn having invested these amounts in petitioner-Society by way of fixed deposit under Fixed Deposit Receipts (FDRs) which would mature as per the due dates mentioned in the FDRs and also the fact that FDR’s having been attached during search proceedings. 5. Records would indicate that search proceedings under Section 132 was conducted on 20.09.2011 in the premises of Shri Ramesh Motilal Chindak and his family members as also the business premises belonging to : 13 : them. During the search proceedings, an order of prohibition came to be passed by the Authorised Officer in exercise of power under Section 132(3) of the Income Tax Act, directing petitioner herein not to remove, part with or otherwise deal with articles like Bank Accounts, SB, CC, FD, TD etc., and the Bank Lockers held in the names of assessees and all types of lockers and accounts held in the name of M/s. Shivaganga Multipurpose Co-operative Society Limited, Shahapur, Belgaum. Pursuant to search proceedings, block assessment was conducted for the year 2006-07 to 2012-13. In respect of asseessees and in respect of M/s. Shivaganga Multipurpose Co-operative Society Limited, Shahapur, Belgaum for the assessment year 2012-13 pursuant to which demand was raised by issuing notice under Section 226(3) to the petitioner- Society herein by calling upon petitioner to pay the amounts held by it on behalf of assessee and the : 14 : amounts invested by M/s. Shivaganga Multipurpose Co- operative Society Limited, Shahapur, Belgaum since it was the undisclosed income of Shri Ramesh Motilal Chindak and his family members. Undisputedly, no reply was submitted by the petitioner-Society to the notice issued under Article 226(3)(i), as such, an order came to be passed on 10.03.2014 by the respondents under Section 226(3)(x) of the Income Tax Act, 1961, calling upon the petitioner to pay the proceeds of fixed deposit, failing which it was notified by the Assessing Officer that petitioner – Society would be treated as an assessee in default. Reply was required to be submitted within three days from the date of notice. However, it was not submitted on time and as such garnishee order came to be passed on 10.03.2014. 6. Prior to passing of order on 10.03.2014, notice under Section 226 (3) came to be issued to the petitioner on 12.02.2014 calling upon the petitioner to : 15 : pay the amount due by the petitioner to the assessees and held by it for and on account of assessee upto the amount of arrears claimed therein which was to the tune of Rs.27.89 crores. The said notice was not replied. Hence, notice was issued on 28.02.2014 to the petitioner to show cause as to why it should not be treated as an assessee in default as per Section 226 (3) (x) of the Act and as to why further proceedings should not be taken against the petitioner-Society for realisation of the amounts as if, it was an arrears of tax due from the petitioner itself by resorting to the provision provided under Sections 222 and 225. Said notice came to be replied by the petitioner on 01.03.2014 admitting that Shivaganga Multi-purpose Co-operative Society Limited has deposited the amounts as specified in the said reply and it was due to be paid on different dates. It was also pleaded by the petitioner-Society that it would not be able to pay the : 16 : amount at one stretch on account of liquidity crunch faced by it and also on the ground that fixed deposits are yet to mature and till such date of maturity it would not become payable. Petitioner-Society also assured the Department that as and when the fixed deposits would become due, the proceeds of such fixed deposits would be paid to the Department and claimed that it has noted the lien of the Department on those FD’s. However, respondent-authorities proceeded to pass order under Section 226 (3) (x) of the Act by treating the petitioner as an assessee in default by order dated 10.03.2014 Annexure-A to A4 on account of reply not having been submitted by the petitioner within stipulated time. Simultaneously, notice of demand under Section 156 of the Income Tax Act also came to be issued as per Annexures-A5 to A9. In reply to the same, petitioner forwarded its reply on 20.03.2014 by forwarding the same under registered post acknowledgement due and : 17 : copy was also delivered in the office of the 1st respondent as could be seen from the acknowledgement found therein. Since under the said communication petitioner had requested to treat the said reply as an application for rectification of order passed under Section 226 (3) (x) and to treat the same as mistake apparent from the record, same was considered by respondent and rejected as communicated to the petitioner on 24.03.2014 Annexure-K. 7. A perusal of provision to Section 226 (3) of the Act would indicate that Assessing Officer or Tax Recovery Officer is empowered to call upon any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money on account of the assessee, to pay to the Assessing Officer or the Tax Recovery Officer, as the case may be, either forthwith upon the money becoming due or being held or had or within the time specified in : 18 : the notice so much of the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of money when it is equal to or less than that of the amount demanded by the Department. When such a notice is issued, such noticee under Section 222 (3) (vi) can object to it by a statement on oath by contending: i) that the sum demanded or in part thereof due to the assessee is not held by the noticee; ii) or ii) no amount is payable by the noticee to the assessee. In such an event, Assessing Officer or the Recovery Officer is required to examine the claim and if the objection or statement is found to be tenable can revoke, amend the notice issued to such noticee i.e., Garnishee. However, if it is found that statement made by the Garnishee is untrue, then Assessing Officer or the : 19 : Tax Recovery Officer, as the case may be, would be empowered to proceed against such Garnishee by treating the Garnishee as an assessee in default under Section 226 (3) (x). If there is no subsisting relationship between the Garnishee and the Assessee, the Department treating such a Garnishee as an assessee in default does not arise. Thus, the words found in Section 226 (3) “money is due or becomes due or any person who holds or may subsequently hold money” would indicate that there should be an existing relationship between the Garnishee and the assessee. If this ingredient is found then Section 226 (3) (x) would be attracted and Assessing Officer or Tax Recovery Officer would proceed to treat the Garnishee as an assessee in default. 8. At this juncture, let me examine the contention raised by Mr.C.V.Angadi, namely that in the instant case, deposits held by the petitioner-Society is yet to : 20 : mature and whether liability of the petitioner would arise only on maturity of the fixed deposits or even prior to it and till maturity of FD’s privity of contract between the Garnishee and the assessee would not arise in the light of the judgment of Hon’ble Apex Court in the case of UNIT TRUST OF INDIA VS. B.M.MALANI AND OTHERS [2007 (212) CTR 425 (SC)]. It has to be held that principle enunciated by Their Lordships in the above judgment would not be applicable to the facts and circumstances of the present case for the following reasons: 9. In the said case, Unit Trust of India being the Garnishee was issued with a notice and pursuant to said notice money held on behalf of assessee was paid by the Garnishee to the Department. A plea was taken by the assessee stating that there was a lock-in period and money deposited by the assessee could not have been withdrawn prematurely without the consent of the : 21 : depositor or the assessee since the interest benefit was being lost and said plea came to be accepted by the Apex Court, by examining the very scheme itself, it was noticed by their Lordships that scheme guaranteed that capital invested in the scheme will be protected on maturity i.e., units will not be redeemed below par. It has been held in the said judgment by Hon’ble Apex Court as under: “12. Whether the action on the part of the appellant to act thereupon was valid, is the question. The scheme, the relevant provision whereof had been noticed by us hereinbefore, goes to show that the lock-in period was for a period of five years. Purchase of the units, however, was allowed from 1st September, 2001 at NAV based repurchase price. The scheme constituted a contract between the parties. The option of the purchase was to be exercised by the respondent. The appellant, on the basis of the said purported notice dated 8.2.2002, : 22 : could not have placed itself in the shoes of the respondent. It is not in dispute that the respondent was a defaulter to the extent of Rs.157.77 lacs. He had sold some of his properties in 1998. A portion of the sale proceeds, namely, 65 lacs had been invested with the appellant. He had sought for exemption under Section 54AE of the Act. The amount of 65 lacs was secured under the said units with the appellants. It is not in dispute that an application for settlement was filed before the Settlement Commissioner by the respondent. He had deposited a sum of Rs.25 lacs when moving an application for deposit of the amount. Upto October 2000, he had already paid a sum of Rs.92.04 lacs. Only a sum of Rs.48,08,000/- were due from him. He, therefore, in his letter dated 4.2.2002 stated as under : _ “Sale of Bonds at present would result in a loss of Rs.3 per unit which will be about 30% loss and it would be difficult to bear such loss while the taxes are pending : 23 : payment. In the event the Bonds are sought to be acquired by the Department, I shall transfer them at its face value at Rs.10/- per unit against taxes although I am voluntarily making the tax payments as per commitments. In the above facts and circumstances, with a great constraint I had paid tax Rs.25.00 lakhs on 31.1.2002 as committed by me in my petition dated 26.10.2001 although I had sought time for above payment till the end of February 2002. It may also be submitted that I had sold my property for the purpose of payment of taxes and opted an additional tax burden of Rs.35.00 lakhs under the Settlement Commission Orders and Co-operated with the Department. In the circumstances, I request you sir to grant time for payment of balance tax till the end of May 2002 as I am given to understand after the budget is presented, the capital gains Bonds issued by Unit Trust of India are likely to be purchased by the Government at par @ Rs.10/- per : 24 : Unit in which case I will not suffer loss on sale and the market rate for sale of such units will also go up. The department was good enough to grant time earlier for payment of tax and I have kept my commitments at all the times and accordingly paid the tax.” 10. In conclusion, it was held by Their Lordships that Clause-(vi) of sub-section (3) of Section 226 of the Act created a legal fiction to the effect that an amount if not payable by the Garnishee to the assessee it is not required to pay any such amount or part thereof and as such it was held that the Unit Trust of India was required to act in terms and conditions of the contract and held that the respondent-assessee is entitled for restitution namely entitled to the dividend declared during the said period from the date of allotment. In fact, the judgment of this Court had also came up for : 25 : examination before the Apex Court in the said case and dictum laid down by this Court has been approved. 11. In the instant case, undisputedly, there is no lock- in period insofar as fixed deposit of the assessee is concerned. Though the period of fixed deposit is stipulated in the fixed deposit receipts, it does not prevent the depositor namely assessee to seek for premature withdrawal of the fixed deposit. Of course, he or she as the case may be has to forego the interest for the remaining period and also in view of the fact that the guidelines issued by the Reserve Bank of India enabling the depositors to withdraw the fixed deposit prematurely they can withdraw the amounts deposited by them prematurely. In this background, similar claim came to be considered by a co-ordinate bench of this Court in the case of VYSYA BANK LTD., VS. JOINT COMMISSIONER OF INCOME TAX AND ANOTHER [2000 (158) CTR (KAR) 60] wherein it has been held : 26 : that jurisdiction to attach the fixed deposit by the Department and obligation of the Bank to make payment of the amount even before maturity of the fixed deposit receipts cannot be found fault with. It has been held as under: “10. Power under section 226 has been given to the Income Tax Officer to recover in the modes provided the amount which is outstanding. Power under section 226 could be exercised by one or more of the methods provided in the section and the certificate of the Tax Recovery Officer has been issued under section 222. Section 226(3) contemplated that the Income Tax Officer may require any person at any time or from time to time (1) from whom money is due, (2) or may become due to the assessee, (3) any person who holds money for an assessee, (4) or may subsequently hold money on account of an assessee, to pay to the assessing officer or Tax Recovery Officer either forthwith upon the money becoming : 27 : due or being held or at or within the time specified in the notice (not being before the money becomes due or is held). There should be an obligation on the person on whom notice is served to pay money to the assessee i.e., the subsisting relationship of a debtor and creditor is sine qua non for the exercise of the power under the section. The relationship of the petitioner-bank and the assessee is that of a debtor and creditor and, therefore, the Income Tax Officer has jurisdiction to attach the amount of fixed deposit receipts irrespective of the fact that the amount is payable at a later period, as on the date of service of notice the relationship of the bank and the assessee as that of debtor and creditor cannot be denied. 11. Section 226(3)(iv) of the Act provides that every person to whom a notice is issued is bound to comply with such notice and with reference to the banking company it is provided that it is not necessary for any deposit receipt to be produced before : 28 : payment is made notwithstanding any rule, practice or requirement to the contrary. 11.1. In view of the judgment of the Apex Court in Budda Pictures case [1967 (65) ITR 620], there has to be subsisting relationship between the garnishee and the assessee. The words 'money is due or becomes due or any person who holds or may subsequently hold money’ were interpreted for that subsisting relationship. The relationship of banker and the assessee in default is not in dispute. The bank is holding money for the assessee. The dispute is only that according to the petitioner the amount has not become due. In the case of a tenant and landlord that subsisting relationship exists because of the tenancy agreement and the amounts become due every month. In such a situation the power under section 226(3) of the Act cannot be exercised to demand the rent for the period for which it has not become due. In order to find out as to whether the amount has become due, it has : 29 : to be seen whether there is a subsisting claim existing on that date. If the deposit receipt matures even at a subsequent date and the assessee wants to get the fixed deposit encashed earlier than the date of maturity, it is considered permissible. Though the contract is entered into by the assessee while obtaining the deposit receipt for receiving the money at a later date yet for the sake of reputation of the bank or for the facility of the assessee or otherwise, payment is made before maturity of the deposit receipt. The department steps in the shoes of the assessee and can claim payment even before its maturity. Even the production of such receipt, deposit receipt is not required in terms of section 226(3)(iv). 12. In these circumstances, the respondent has the jurisdiction to attach the fixed deposit and the bank is under obligation to make the payment of the amount even before the maturity of the fixed deposit receipt. It may be observed that according : 30 : to the instructions which are issued by the Reserve Bank from time to time if a depositor wants to encash the fixed deposit receipt before its maturity, the bank is bound to refund the amount with lesser interest as is permissible looking to the time involved. The position of contracts entered into by an assessee with other companies or partners, where there is no such express or implicit contract for payment before the maturity date, the position stands on a different footing since according to the banking norms, the fixed deposit can be encashed before its maturity date.” 12. Keeping these principles in mind when the facts on hand are examined, it would clearly indicate that undisputedly the petitioner did not file objection to the Garnishee notice issued under Section 226 (3)(1) by raising an objection as required under Section 226 (3) (vi) and for this precise reason and also for the reason that the petitioner-Bank did not dispute the relationship : 31 : between it and the assessees including Shivaganga Multi-purpose Co-operative Society Limited it enabled the Department to arrive at a conclusion that petitioner is to be treated as an assessee in default and accordingly an order came to be passed under Section 226 (3) (x). In view of the fact that petitioner does not dispute about deposits held by it on behalf of the assessee and the same being payable by the petitioner to the assessee and non-compliance of the demand notice raised by the Department under Section 226 (3), respondents have rightly held that petitioner is to be treated as an assessee in default. There is no infirmity in the order passed by the respondents calling for exercise of extra-ordinary jurisdiction by this Court. Hence, writ petitions are hereby dismissed. It is needless to state that whatever the amounts that are held by the petitioner either on behalf of the assesee or on behalf of M/s Shivaganga Multi-purpose : 32 : Co-operative Society Limited ultimately payable to assessees would be the amounts payable by the petitioner-Society to the respondent-Department. Ordered accordingly. (sd/-) JUDGE Jm/Rsh/Jm/- "