Nilesh Shah Writes:
Cell: 92246-59941
E Mail: nilesh63@vsnl.
Garnishee proceedings on the Unit Trust of India (UTI)or on any
other mutual fund or on banks is essentially one of attachment.
Where the Income tax authorities ask for pre mature redeemption ,
UTI or any other mutual fund is not justified in redeeming them
without the consent of the holder of the units. The UTI has no
authority to dispose of the units on its own without any notice to
the holder of the units. The UTI could not have ignored the terms of
its contract with the unit-holder. The units remains under
attachment as security for the Government. If UTI undertakes such
pre mature redeemption without the consent of the unit holder the
unit holder is entitled to the value of the units along with
dividend during the period from the date of their allotment to the
date of discharge of the garnishee proceedings, because the assessee
is entitled to be restituted. This kind of mistakes occur in the
case of garnishee proceedings, since the Income tax authorities
persuade or pressurise especially the banks to foreclose fixed
deposits before maturity without notice or consent or discharge
certificate of the deposit-holder. It is necessary that the
authorities must know the limits of their powers and should not act
over-zealously to the detriment of the taxpayer's interest, when the
arrear collection is not in jeopardy.
Yours Sincerely,
Nilesh Shah.
CAclubindia
