1983 (9) TMI 62

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....are required to be stated briefly to appreciate the contention urged on behalf of the petitioners. The petitioner-company was formed in the year 1971, with the object to take over Wireless Manufacturers (India), a partnership concern having four partners, who were all family members, at the relevant time. On July 12, 1971, the partnership concern entered into an agreement to sell its assets to the petitioner-company, and one of the terms of the agreement indicates that the machinery of the partnership firm was already handed over to the petitioner-company long prior to the execution of the agreement. It is required to be stated that the petitioner-company and the partnership firm are really sister concerns. On July 1, 1974, the Tax Re....

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....y to the ITO so much of the money which are sufficient to pay the amount due by the assessee. In other words, this section enables the ITO to recover the amount from the garnishee of the assessee. Clause (vi) of s. 226(3) reads as under: " Where a person to whom a notice under this sub-section is sent objects to it by a statement on oath that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee, then, nothing contained in this sub-section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the ....

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.... any action. Shri Joshi states that the ITO will now consider whether the statements made in the affidavits should be accepted or otherwise, and, in case the statements made in the affidavits are found to be correct, then the ITO will not proceed to recover the arrears from the petitioners. The ITO is at liberty to proceed in accordance with the notice dated July 1, 1974, to recover the arrears in case it is found that the statements made in the affidavits are false in any material particular. It is made clear that the notice dated July 1, 1974, is not set aside as also the prohibitory orders issued by the ITO. The ITO is entitled to proceed to recover the arrears in accordance with the provisions of s. 226 of the Act provided it is discove....