Priority of IT dues over Banks Lien
girish parmar
(Querist) 23 February 2011
This query is : Resolved
The Bank has extended Cash Credit and non fund based facility to the Borrower. Against the Borrower\'s outstanding loans, the Bank has marked lien over the fixed deposit of Borrower. Meanwhile IT Department has issued notice under Section 226(3) to the Bank claiming priority of its claim against the Banks right of Lien. Can the Bank exercise its right of lien and only after adjusting its outstanding dues against the Fixed Deposit proceeds of the Borrower, remit the surplus amounts to IT Authorities? Can the IT Department claim priority of its dues as Crown Debt?
B.Chakrapani Warrier
(Expert) 24 February 2011
The fixed deposit not being a negotiable instrument, attachment of the amount in FD could be made by IT department under section 226(3) of the IT Act,1961.
citation :- Vysya Bank Vs. JCIT (2000)241 ITR 178 (Kar).
malipeddi jaggarao
(Expert) 24 February 2011
Mr.Chakrapani, the citation you have quoted is applicable in the cases where the attachment of bank deposit is challenged as it is not due for payment. In the referred case, Bank itself is the creditor and the bank has the right of lien and set-off over the securities that might into its hand if the debtor and owner of the securities is one and the same and in the same capacity. Mr.Parmar, in the given case Bank can certainly exercise its right of lien and the residual if any can only be attachable. Search the websites to find out a suitable case to quote.
