2002 (6) TMI 9 - HC - Income Tax

Petitioners are challenging income-tax recovery notice - garnishee proceedings - Since the petitioners have no direct grievance nor any claim of priority over the income-tax dues, I do not think that they have any right to question the recovery notice against the employer. On this ground alone, the original petition is liable to be dismissed. - The next question is the petitioners claim of immunity under the proviso to section 226(2) of the Income-tax Act. It is obvious from the said sub-section that immunity is against attachment of part of salary in recovery proceedings initiated against an employer for recovery of tax due from an employee. - So long as this court has no jurisdiction under article 226 of the Constitution of India to decree the salary arrears payable by the third respondent which is a company at Madras to the petitioners, this court is disabled to consider any priority for the petitioners claim over the arrears of income-tax due from their employer to the Government. - the original petition is dismissed

Summary

Issues:
Challenge to income-tax recovery notice under garnishee proceedings; Claim of immunity under proviso to section 226(2) of the Income-tax Act.

Analysis:
The petitioners, claiming to be employees of a company supplying security personnel, challenged an income-tax recovery notice issued by the Deputy Commissioner of Income-tax. The notice aimed to recover arrears of income tax from the petitioners' employer. The petitioners argued that the amounts due from the company should be used for their salaries and claimed immunity under the proviso to section 226(2) of the Income-tax Act. However, the court found the original petition not maintainable as the petitioners lacked standing to question the income-tax recovery proceedings against their employer. The court highlighted that income-tax authorities have the right to adopt all means for recovery from a defaulter, and employees cannot challenge it directly.

Regarding the claim of immunity under the proviso to section 226(2), the court determined that the petitioners could not claim immunity as the attachment was not on their salaries, and the notice was not served on their employer. The court emphasized that the immunity provision applies to recovery proceedings against an employer for tax due from an employee, which was not the case here. The court stated that the petitioners should approach the appropriate authority or court to claim any arrears of salary and prioritize their claim over income-tax arrears, rather than challenging the income-tax recovery notice indirectly.

Ultimately, the court found no grounds to interfere with the income-tax recovery notice and dismissed the original petition. The judgment highlighted that the court lacked jurisdiction to decree the salary arrears payable by the employer to the petitioners and emphasized that the petitioners' indirect challenge to the recovery proceedings aimed at defeating income-tax arrears recovery was not valid. The Registry was directed to inform the relevant authority about the judgment.