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TMI Blog1991 (5) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... n together with the costs awarded within a period of two months. On the amount being so deposited, half of the amount will be allowed to be withdrawn without security and remaining half only on furnishing security. (Sd.) N.N.M., (Sd.) C. P. M. 12-9-1990. The Assistant Commissioner of Income-tax, Meerut Circle, vide his letter dated October 16, 1990, addressed to the IVth Additional District judge, Meerut, had requested the additional District judge for payment under section 226(4) of the Income-tax Act in respect of the outstanding income-tax demand to the tune of Rs. 11,32,531 in respect of the assessment years 1980-81 and 1987-88. It is against this action of the income-tax authorities taken under section 226(4) of the Income-tax Act that the present writ petition has been filed praying for a writ of certiorari quashing the order dated October 16, 1990, passed under section 226(4) of the Income-tax Act by the Assistant Commissioner of Income-tax, Meerut, addressed to the IVth Additional District judge, Meerut. Learned counsel for the petitioner has urged that the amount which has been deposited under the orders of the High Court dated September 12, 1990, does not belong to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opy of the notice shall be forwarded to the assessee at his last address known to the Income-tax Officer, and in the case of joint account to all the joint holders at their last addresses known to the Income-tax Officer. (iv) Save as otherwise provided in this sub-section, every person to whom a notice is issued under this sub-section, shall be bound to comply with such notice, and, in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary for any pass book, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary. (v) Any claim respecting any property in relation to which notice under this sub-section has been issued arising after the date of the notice shall be void as against any demand contained in the notice. (vi) Where a person to whom a notice under this sub-section is sent objects to it by a statement on oath 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redient for exercising the power by the Income-tax Officer under section 226(3). It is only after the issuance of the notice that the liability to pay the amount to the Income-tax Department arises. A right has also been given to the person to whom a notice under section 226(3) is issued to file objections. On the other hand, we find that, under section 226(4), the Income-tax Officer makes an application to the court in whose custody there is money belonging to the assessee for payment to him. Section 226(4) of the Act does not require the giving of notice to the assessee inasmuch as the application has to be made by the Income-tax Officer to the court. The basic difference in sub-section (4) regarding absence of notice to the assessee is obvious. The proceedings in the court are judicial proceedings and, if an application under section 226(4) of the Act is received by the court, a judicial order will have to be passed by the court in respect of that application after hearing the parties concerned. We are thus of the opinion that section 226(4) of the Act, on its plain reading, does not require the giving of notice to the assessee and further, even otherwise, there is no necessity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aghavendra Rao [1976] 103 ITR 294 (AP) is concerned, we are of the opinion that the same has also no application inasmuch as, in the aforesaid case, the petitioner-assessee had instituted a suit for specific performance of an agreement of sale of house against the third respondent. Certain amount was paid at the time of entering into the agreement. When the suit was instituted, the petitioner-plaintiff deposited the balance sale consideration in the court. The suit was partly decreed and the assessee was held entitled to damages. On appeal, the High Court held that the plaintiff-assessee was entitled to the specific performance of the agreement. As the sale deed was not executed by the vendor, the Commissioner appointed by the court executed the sale deed. However, it could not be registered for want of production of a tax clearance certificate by the vendor. While so, the Income-tax Officer filed a petition before the trial court under section 226(4) of the Act for payment of money, lying in deposit in the court, towards tax due from the petitioner-vendee. The trial court held that, as the sale deed was not registered, the vendor had not become the owner of the money lying in depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid amount deposited under the orders of the court. Another decree-holder also attached this amount. The Additional Income-tax Officer made a request for issuance of a cheque for Rs. 3,281-88 representing the arrears of income-tax and penalty due by the judgment-debtor. The aforesaid application of the Income-tax Officer was allowed. Aggrieved, a revision was filed in the High Court. In the aforesaid case, the High Court held (at page 76) : " In the instant case, the deposit was made to avoid a receiver being appointed and to protect the interests of the plaintiff. There was no order giving a direction to appropriate it towards any decree that might be passed. The order was merely to deposit the amount into court. It is only when an appropriation is made of the money deposited in court under the orders of the court towards the decree that it ceases to be the property of the judgment-debtor and his creditors could not proceed against it either in execution of the decree or in realisation of arrears of land revenue or taxes. Mere direction to deposit a particular sum of money does not amount to its being earmarked for a particular purpose. It is only when there is a defini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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