TaxTMI 
TaxTMI 
1960 (1) TMI 30
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....ers in W.P. No. 981 of 1958 on March 7, 1952. In that notice it was stated that tax amounting to the sum of Rs. 72,819-9-0 was due from the assessee to the Department and a demand was made that the petitioners, who owed money to the assessee, should pay the Officer the amount due from them or held by them for or on account of the assessee, up to the amount of arrears stated. A similar notice was served on the petitioner in W.P. No. 980 of 1958 also at about the same time. The petitioners in W.P. No. 981 of 1958 assert that soon after receiving the notice, they sent the Officer a written objection to it on the ground that no sum was due from them to, or held by them on account of, the assessee, but for the purposes of these petitions, I a....
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....ay at any time or from time to time amend or revoke any such notice or extend the time for making any payment in pursuance of the notice. Any person making any payment in compliance with a notice under this sub-section shall be deemed to have made the payment under the authority of the assessee and the receipt of the Income-tax Officer shall constitute a good and sufficient discharge of the liability of such person to the assessee to the extent of the amount referred to in the receipt. Any person discharging any liability to the assessee after receipt of the notice referred to in this sub-section shall be personally liable to the Income-tax Officer to the extent of the liability discha....
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....the Bill) is contained in the following extract from Appendix A of the Report of the Commission : "An amendment to section 46 of the Act seems necessary to facilitate realisation of the tax and in some instances even to ensure that recovery proceedings are not rendered infructuous by the assessee. Under the law as it now stands, the Income-tax Officer must seek the aid of the Collector to recover tax in arrears except in cases falling under sub-sections (3) and (4) of section 46. Even under these two subsections, the procedure is not always simple. Other systems of law permit the taxing authority to serve a notice upon persons who may hold or who may be expected to come into possession of monies belonging to the ....
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....ree. The provision, it seems to me, is intended to apply only to an admitted liability. Where a person admits by word or conduct that any money is due to the assessee or is held by him for or on account of the assessee, he becomes liable to pay it and may well be exposed to the penal provision which enables the Income-tax Officer to take further proceedings before the Collector on the footing that the notice issued has the same effect as an attachment by the Collector in exercise of his powers under the proviso to sub-section (2) of this section. If, for instance, aftter taking the notice, a person makes a payment to the assessee, and that can only be on the footing that he owed money to the assessee, then, to the extent of the sum so paid ....
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....ence and quantum of such liability-matters which are normally within the purview of civil courts. I may add that this interpretation seems also to accord with the language of sub-section (5), of which it is clear that this provision is an extension. That sub-section is as follows: "If any assessee is in receipt of any income chargeable under the head 'Salaries' the Income-tax Officer may require any person paying the same to deduct from any payment subsequent to the date of such requisition any arrears due from such assessee, and such person shall comply with any such requisition, and shall pay the sum so deducted to the credit of the Central Government, or as the Central Board of Revenue directs." The powe....