9911796707
TMI Blog2003 (8) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... .27 crores from VCVL on account of arrear tax. It is the contention of the income-tax authorities that VCVL has failed and neglected to discharge the tax liabilities mentioned above. It is the contention of the income-tax authorities that in order to recover their said dues, steps have been taken under section 226 of the Income-tax Act, 1961. The said section authorises the Assessing Officer, being the Tax Recovery Officer, to require any person from whom money is due or may become due to the assessee to pay so much of the money as is sufficient to pay the amount due by the assessee. In order to recover money from any such person concerned, he is required to be notified by a notice. The said section authorises the person concerned, to whom such notice is issued, to object. In order to object, the person concerned, in accordance with the said section, is obliged to make a statement on oath. What statement can be made while making such objection has also been provided in the section itself. The statement may be either 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. The said provision makes it a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Recovery Officer against the petitioner by invoking the provisions of section 226 of the Act the one and only defence of the garnishee was and is its defence to the claim of the creditor and of no one else. In that view of the matter, I am of the view that the moment when such statement was made on oath by the petitioner, the same ought to have been rejected inasmuch as such statement was not within the parameter of the section inasmuch as the same did not disclose any defence to the claim of the creditor. The petitioner had approached the Delhi High Court for almost similar purpose. The petitioner had also approached earlier this court and the matter was taken up before the Division Bench, when before the Division Bench it was contended that the Assessing Officer of VCVL was taking one stand and the Assessing Officer of the petitioner was taking yet another stand and, accordingly, that itself is a defence to the claim of the Tax Recovery Officer, Delhi. The Division Bench with anguish expressed that the petitioner must clear its own stand, i.e., which stand it would prefer-the stand of the Assessing Officer of VCVL or the stand of the Assessing Officer of the petitioner and, ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant writ petition the validity of the said notice has been challenged. It has been contended that section 226 of the Act does not permit initiation of garnishee proceeding against a creditor of a garnishee. Sub-section (3) of section 226 deals with initiation of garnishee proceedings against a person who is liable to pay some money to the assessee at default. Clause (x) of sub-section (3) of section 226 of the Act provides that if such garnishee fails to pay 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 the same was an arrear of tax due from him, in the manner provided in sections 222 to 225 of the Act and the notice shall have the same effect as an attachment of a debt by the Tax Recovery Officer in exercise of his power under section 222 of the Act. The Legislature, therefore, while making the garnishee at default a deemed assessee, has restricted the right to recover the money due from him within the four comers of sections 222 to 225 of the Act and did not extend the same also to section 226 of the Act. While interpreting any st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst APBCL in relation to the amount due by it to the petitioner. In that view of the matter, for all practical purposes it must be deemed that the notice issued under section 226(3) of the Act upon APBCL was in fact an attachment notice with an intimation that APBCL can pay the attached amount to the Tax. Recovery Officer, Delhi, in discharge of its debts due to the petitioner and in the event such payment is made, the receipt to be issued therefor by the Tax Recovery Officer, Delhi, acknowledging the same would discharge it from the debt due by the amount mentioned in such receipt and for no other purpose. The Tax Recovery Officer, Delhi, is thus directed to issue a further notice to APBCL mentioning that the notice issued earlier under section 226(3) dated February 24,2003, is in fact a notice of attachment. It shall be open to the Tax Recovery Officer, Delhi, to state in that notice that it shall be open to APBCL to pay the amount due to the petitioner by it and attached at his hand to the Tax Recovery Officer, Delhi, and in the event such payment is made, APBCL shall stand discharged from its debts due to the petitioner to that extent. It shall also be open to the Tax Recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X
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