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TMI Blog1963 (10) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... tached and that it should be credited to the Government as he was in arrears of income-tax to the extent of about ₹ 46,819.15. The petitioner sent a reply on June 26, 1959, and submitted that it had not engaged Baliah for acting in any film produced by it and that there was no subsisting service agreement between them. The department did not send any further notice as apparently it was satisfied that the petitioner did not owe any money to Baliah. Two years elapsed and in the meantime the arrears of tax payable by Baliah amounted to ₹ 86,111.12. On March 21, 1961, the department issued a further notice to the petitioner under section 46(5A) of the Act attaching all payments due by it to Baliah. It must be mentioned that in between these two notices the petitioner had entered into a contract with Baliah on March 28, 1960. The contract was that Baliah should play a role in the petitioner's production No. 2 (Tamil) for a consolidated remuneration of ₹ 20,000. On the date of the contract Baliah is said to have been paid a sum of ₹ 7,000. It is alleged that there were two further payments by the petitioner to Baliah, ₹ 6,000 in cash on February 9, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,000 to the department really turns upon its proper interpretation. Section 46(5A) reads: 46. (5A) The Income-tax Officer may at any time or from time to time, by notice in writing (a copy of which shall be forwarded to the assessee at his last address known to the Income-tax Officer) require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee to pay to the Income-tax Officer, either forthwith 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) so much of the money as is sufficient to pay the amount due by the taxpayer in respect of arrears of income-tax and penalty or the whole of the money when it is equal to or less than that amount....... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For a case in which section 218 was considered, In re Whiting [1951] V.L.R. 205 has been referred to. We have not been able to get at this report and we do not know the decision therein. The section provides a machinery for the department to collect tax arrears from the debtors of the assessees. It is in substance the familiar garnishee proceedings under the Civil Procedure Code. The basic foundation would appear to be the subsistence of a relationship of a debtor and creditor, between the garnishee and the assessee. The scope of this section came in for consideration by this court in a different context. That is the decision in Adam v. Income-tax Officer [1958] 33 I.T.R. 26. In that case an assessee was in arrears of tax. He had an overdraft account with a banker. The limit of overdraft allowed by the banker was ₹ 1,37,500 of which the assessee had drawn up to ₹ 1,31,301. This latter amount was debited to the assessee in the banker's books of account. The Income-tax Officer served a notice on the banker to the effect that the banker should pay to the officer any amount due or becoming due from the banker to the assessee or any money which the banker may hold su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the proper interpretation of the words any person from whom money is due or may become due to the assessee. It is common ground in the present case that the petitioner was not holding and did not subsequently hold money for or on account of the assessee. Now what does the expression may become due mean? Can it be understood as money which would become payable by the garnishee to the assessee in future after the service of the notice as a result of a pre-existing liability, or, would it also cover a case where the liability itself comes into existence after the service of such a notice? The assessee's contention is that the words describe a class of cases which can be compendiously described as debitum in praesenti solvendum in futuro and that their meaning should not be extended beyond such categories of cases. The department, however, contends that the words must be given their plain grammatical meaning and that, therefore, may become due would sufficiently cover even a case where a relationship of debtor and creditor is established after proceedings are initiated under section 46(5A). The most important word in the context is due . The Concise Oxford Dictionary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an attitude on the part of one of the contracting parties would scare away persons from entering into a contract, the fruits of which would enure for the department. No one is so selfless as to work for liquidating his tax dues, or, in other words, to mortgage his future for discharging his past arrears of tax. If the law were to be that a notice under section 46(5A) would remain in perpetual and continuous operation, preventing the alleged garnishee from performing his contractual obligation incurred after the notice, there can be no doubt that the garnishee would be driven out of the trade or business and the assessee would in all probability retain his position as one in arrears of tax. A jeopardy of this kind should not be too readily assumed to have been created by any enactment which has in its purview only the levy and collection of tax. The tax can be collected from the person liable to pay the tax or from his debtor and not from a person who may become a debtor at some time in future. An Act cannot be so construed unless the words are compelling and do not admit of any doubt, so as to deprive parties of ordinary private rights. Express and unequivocal language would be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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