Notice u/s.226(3) Income Tax Act for recovery of certain income-tax dues from an individual. - Income Tax - 1224/CBDT

INSTRUCTION NO. 1224/CBDT Dated : December 15, 1978 Section(s) Referred: 226(3) , Rule 26 of IInd Sch Statute: Income - Tax Act, 1961 Recently the Central Debt Section of the RBI brought to the notice of the Government a case in which an ITO issued a notice u/s.226(3) of the I.T. Act in connection with the recovery of certain income-tax dues from an individual. The notice did not contain the distinguishing number of Annuity Deposit Certificates held by the deceased holder. The local office of the RBI requested the ITO to incorporate the particulars of the Annuity Deposit Certificates in the notice already served. However, as the particulars of certificates had been furnished in an earlier communication by the ITO, the Bank was able to pay over the amount due on the Annuity Deposit Certificates to the ITO. However, since the concerned ITO had informed the RBI that under law it was not necessary for him to specify any distinguishing numbers of the Annuity Deposit Certificates the Bank has brought it to the notice of the Government that it does not maintain any name-wise record of the holders of Government securities and as the number of annuity deposit certificates issued by any office will be very large, it will not be practicable to locate the particulars of certificates held by the defaulter-assessees and make payment of the sums due thereon to the tax authorities in the absence of the particulars either in the notice or in related correspondence. 2. This matter has been examined in the CBDT in consultation with the Department of Economic Affairs. The Board is of the view that it was not proper on the part of the ITO to refuse to supply to the RBI the particulars of Annuity Deposit certificates available with him. It must be remembered that while the provisions of sec.226(3) and of rule 26(i) of the 2nd schedule confer certain legal rights on the Department to facilitate recovery of taxes, the paramount purpose of these provisions is to facilitate tax collections. It cannot be denied that in practice the RBI does issue a very large number of Government Securities including Annuity Deposit certificates and since no name-wise record of the holders of such securities is kept by the Bank, it will be quite difficult for it to locate the particulars of Annuity Deposit certificates held by any defaulter. It could even entail a risk to the revenue if, between the issue of a garnishee notice/attachment and the identification of the certificates, an assessee obtains payment of the annuities due under the certificates. The Board, therefore, desire that the ITO/TRO should, at the time of issuing notices u/s.226(3)/ serving attachment orders under rule 26(1) on the RBI or other public financial institutions invariably supply to the institution full information that is available with them. This could be done in the form of a letter addressed to the Reserve Bank/Public financial institutions concerned. In the letter the ITO may specify that while he is giving the details available with him, the Bank would be liable to make payment to him of any amount due on any other account besides the amount due on the certificates mentioned in the letter. 3. If for any reason, the distinguishing numbers of the Certificates are not immediately available, he should at any rate give all the information available with him along with the original notice u/s.226(3)/order under rule 26(1) and furnish full additional details after collecting the same from his records or through local enquiries within a fortnight of the first communication/order. 4. The contents of this instruction may be brought to the notice of all ITOs/TROs working in your charge for their strict compliance.