Income-tax recovery from court deposit upheld where the owner consented and section 226(4) permitted transfer.

Section 226(4) of the Income-tax Act, 1961 was applied to uphold transfer of money lying in court deposit to the Income-tax Officer. The amount had been admitted by the petitioner to belong to Mohamed Ibrahim, and Mohamed Ibrahim had also consented to its transfer to the tax department. The Madras HC further held that, even apart from that consent, the Magistrate was entitled to comply with the Income-tax Officer's demand under section 226(4). The request for return of the amount to the petitioner or for its continued retention in court custody was rejected, and the transfer in favour of the income-tax department was maintained.

---

---

Issues: Whether the sum of Rs. 1,70,000 lying in court deposit could be directed to be returned to the petitioner, retained in court custody, or recovered by the Income-tax Officer towards the assessment of the debtor, in the light of section 226(4) of the Income-tax Act, 1961.

Analysis: The petitioner had admitted that the amount belonged to Mohamed Ibrahim, and Mohamed Ibrahim had himself consented to the amount being transferred to the Income-tax Officer. The court further held that, even apart from such consent, the Magistrate was entitled to comply with the demand of the Income-tax Officer under section 226(4) of the Income-tax Act, 1961. No ground was made out to interfere with the order directing transfer of the amount to the income-tax department.

Conclusion: The claim for return of the amount or for retention of the amount in court custody was rejected, and the direction in favour of the Income-tax department was upheld.

---