TaxTMI 
TaxTMI 
2008 (10) TMI 235
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....y 22, 1990, to the effect that the petitioner is the sole surviving family member. The petitioner is filing returns of income for the last several years. In his returns, he has showed that he has inherited the property of the mutt and he is filing returns and paying taxes on the income derived from the properties of the mutt. 3. One Krishnamohananda Giri Goswami claims to be the mahant of the mutt after the death of Kriishnananda Giri Goswami. The dispute between them is pending in various civil courts. On the income-tax side the dispute reached this court and it was held that, even if it is to be held that the properties belong to the mutt, that finding would in no way come in the way of the civil courts going into the title of the property and the petitioner can get his rights adjudicated in a civil court. However, when the petitioner called upon the Income-tax Department to inform him the liability of the mutt, so that the petitioner who is the successor could pay the amount legally due to the Department, the Department has not so far informed the petitioner about any such liability. On the contrary, the Department is not recognising the petitioner as a person who has inherit....
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....ch payment, his money could be attached at the hands of his garnishee. Secondly, he contends that, even if the petitioner does not pay money in spite of the demand by the Department towards monies due to the assessee, then the petitioner would be personally liable to pay the amount and if at all the said money has to be recovered it should be under sections 222 to 225. The provision of section 226(3) cannot be invoked against the garnishee of the petitioner. Therefore, he submits that, seen from any angle the impugned action of the respondents is one without jurisdiction and requires to be quashed. 6. Per contra, learned counsel for the respondents contended that the amount now attached in pursuance of the impugned notice is in the account of Ramajanam and not the petitioner and, therefore, the petitioner cannot maintain this writ petition. Secondly, he contends that the petitioner has sold the properties belonging to the mutt in spite of an order of attachment. The sale consideration realised out of such sale is now in the bank account of his power of attorney Ramajanam. This money which is in the bank account is traceable to the property of the mutt. Therefore, they were justi....
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....anded 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 Assessing Officer or Tax Recovery Officer to the extent of his own liability to the assessee on the date of the notice, or to the extent of the assessee's liability for any sum due under this Act, whichever is less…….. (x) If the person to whom a notice under this sub-section is sent fails to make payment in pursuance thereof to the Assessing Officer or Tax Recovery Officer, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were an arrear of tax due from him, in the manner provided in sections 222 to 225 and the notice shall have the same effect as an attachment of a debt by the Tax Recovery Officer in exercise of his powers under section 222." 9. Inte....
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....ault to the extent of the amount specified in the notice. Further, reading clause (x) of sub-section (3) of section 226, it is apparent that the Legislature has not provided that from the debtor of the assessee who is deemed to be an assessee in default as provided in clause (x), the arrears of tax can be recovered as provided under sub-section (2) of section 226. On the contrary, there is specific provision that it is to be recovered as provided in sections 222 to 225. If we accept the contention raised by learned counsel, Mr. Thakore, for the Revenue, that once the debtor of the assessee is deemed to be an assessee in default, then his salary can also be attached as provided under section 226(2), then, the relevant part of the sentence 'in the manner as provided in sections 222 to 225' in clause (x) of sub-section (3) would be redundant. The Legislature would have stopped only by providing that-in such cases-further proceedings may be taken against him for the realisation of the amount as if it were an arrear of tax due from him-and the second part 'in the manner provided in sections 222 to 225' was not necessary." 10. Following the said judgment a Division Bench of the Cal....
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.... that the Legislature had deliberately and intentionally omitted and had intended to exclude the application of section 226 in a case contemplated under clause (x) of section 226(3). Therefore, we are of the view that the learned single judge has correctly decided the question. 11. A learned single judge of this court in the case of Vysya Bank Ltd. v. CIT [2000] 241 ITR 178 (Karn) has held as under (headnote): "Section 226(3) of the Income-tax Act, 1961, contemplates that the Income-tax Officer may require any person at any time or from time to time (1) from whom money is due; (2) or may become due to the assessee ; (3) any person who holds money for an assessee ; (4) or may subsequently hold money on account of an assessee, to pay to the Assessing Officer or Tax Recovery Officer either forthwith or upon the money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held), There should be an obligation on the person on whom notice is served to pay money to the assessee, i.e., the subsisting relationship of a debtor and creditor is a sine qua non for the exercise of the power under the section. In the case of....
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....overed from such person as if it were an arrears of tax due from him, In the manner provided in sections 222 to 225, and the notice shall have the same effect as an attachment of a debt by the Tax Recovery Officer, in exercise of his powers under section 222. In case he objects to the payment on the aforesaid grounds and later it is discovered that such statement was false in any material particulars, such person shall be personally liable to the extent of his own liability to the assessee on the date of notice or to the extent of the assessee's liability for any sum due under the Act, whichever is less. 15. Therefore this provision is intended to recover money due from an assessee in the hands of a garnishee of the assessee. For the application of the aforesaid provision the condition precedent is, the person who is demanded to make payment should be due in any money to the assessee. It is only to such person the Assessing Officer or the Tax Recovery Officer may issue a notice demanding him to make payment of the monies which are due by him to the assessee which is sufficient to pay the money due to the assessee in respect of arrears or the whole of the money when it is equal o....