Coercive tax recovery against third parties fails where liability is disputed and no time limit is implied for objection.

Section 46(5A) of the Income-tax Act was construed as permitting coercive recovery only where the noticee admits liability or holds money for the assessee. If the noticee objects that no amount is due from him, the Income-tax Officer cannot use the recovery machinery to decide a disputed debt between the assessee and the third party, and coercive proceedings cannot continue on a contested claim. The provision also contains no express time limit for raising such an objection, and no reasonable-time requirement can be implied. On that construction, the notice could not be enforced against a person denying liability.

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Issues: (i) Whether, under section 46(5A) of the Income-tax Act, a person served with notice can resist coercive recovery by objecting that no money is due from him to the assessee. (ii) Whether such an objection must be taken within a reasonable time.

Issue (i): Whether, under section 46(5A) of the Income-tax Act, a person served with notice can resist coercive recovery by objecting that no money is due from him to the assessee.

Analysis: The provision was construed as applying only where liability is admitted. The noticee is protected once he objects on the footing that the sum demanded is not due or that he does not hold any money for or on account of the assessee. The section does not authorise the Income-tax Officer to decide disputed questions of liability between the assessee and a third person, and the coercive machinery cannot be used to compel payment where the alleged debt is denied.

Conclusion: The objection is effective, and coercive proceedings cannot be taken against the noticee on a disputed claim of liability.

Issue (ii): Whether such an objection must be taken within a reasonable time.

Analysis: The clause contains no limitation as to the time within which an objection must be raised. No such restriction can be implied either for the Officer or for the Court.

Conclusion: No reasonable-time requirement was read into the provision.

Final Conclusion: The petitions succeeded and mandamus was granted with costs, as the statutory notice could not be enforced against a person who denied liability under the provision.

Ratio Decidendi: Under section 46(5A) of the Income-tax Act, coercive recovery cannot be pursued against a noticee who objects that no amount is due from him to the assessee, and no time limit for raising such objection can be implied in the absence of express words.

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