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Rajnish Kumar   11 September 2020

income tax attachment Order applicable on Cash Credit account or not

Bank has received a income tax attachment order and concern party has only cash credit facility of rs 5 lacs with bank but no other deposit or FDR account . there was debit balance in cash credit account while receiving attachment order i.e half of limit is available by borrower.
kindly advise Normal operation is allowed within sanction limit cash credit account or set stop on cc account in view of attachment order or is it not applicable on Cash Credit account as bank is not debtor due CC account.


 2 Replies

Dr J C Vashista (Advocate)     11 September 2020

Attachment of an amount can be made where the account holder has amount available in his / her account.

No legal issue is involved in the facts posted.

Procedural query can be solved / advised by concerned bank.

G.L.N. Prasad (Retired employee.)     11 September 2020

Cash credit limit is sanctioned for availing working capital facility with a condition that end use of the money is strictly for the purpose of getting stocks through payment from that account.

Hence CC account with debit balance can not be attached and it is the Banker's duty to inform facts to ITO.

It depends on the banker.  The banker may open a fresh account and transfer such debit balance in the new account to old account and bring the balance as NIL and can permit cash credit operations in the new account.

Let the bank take instructions from higher authorities as they are shy in taking risks.

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