Garnishee notice under income-tax law binds a firm holding a deceased partner's funds despite later family arrangements

Section 46(5A) operates as a garnishee provision that restrains a person holding money belonging to an assessee in default from dealing with it contrary to the notice. A credit standing in a deceased partner's name remained his asset on death, and a later arrangement among heirs and surviving partners could not change the character of that fund or defeat recovery of tax arrears. A firm in control of such money and allowing withdrawals despite notice is bound to comply with the statutory demand, and the revenue's proceedings against it remain valid and within jurisdiction.

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Issues: Validity of the notice issued under section 46(5A) of the Indian Income-tax Act, 1922, and whether the reconstitution of the firm and the subsequent treatment of the deceased partner's credit as share capital of his heirs prevented recovery of the deceased partner's tax arrears from the petitioner-firm.

Analysis: Section 46(5A) operates as a garnishee provision enabling the revenue to restrain a person holding money belonging to an assessee in default from paying it away except in accordance with the notice. The credit standing in the name of the deceased partner on the date of death remained his asset, and a voluntary arrangement by the heirs with the surviving partners could not alter the character of that fund or defeat the revenue's right to proceed against it. The petitioner, having control over the amount and having allowed withdrawals in disregard of the notice, was liable to be treated as a garnishee bound to comply with the statutory demand.

Conclusion: The notice under section 46(5A) was valid, and the petitioner-firm could not resist recovery on the footing that the heirs had treated the amount as their share capital. The proceedings initiated by the revenue were within jurisdiction and in order.

Ratio Decidendi: Money belonging to an assessee in default cannot be insulated from recovery by a post-death family or partnership arrangement that merely changes its form or hands; a garnishee in possession or control of such money must comply with a valid notice under section 46(5A).

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