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TMI Blog2008 (10) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... law. - 11433 of 2006 (T-II) - - - Dated:- 1-10-2008 - N. Kumar J. A. Shankar for the petitioner. M. V. Seshachala for the respondent. JUDGMENT N. KUMAR J. - The petitioner has preferred this writ petition seeking a writ of certiorari to quash the notices at annexures A1 to A5 issued under section 226(3) of the Income-tax Act, 1961, by the first respondent to the managers of various banks and also a writ of mandamus directing the first respondent to return to the petitioner the amount collected illegally from the bankers of the petitioner forthwith. 2. The material on record discloses that there exists one Tirupura Bhairavi Math in Northern India which has properties in the State of Karnataka. One Krishnananda Giri Gowswami was the mahant of this mutt. The said Krishnananda Giri Gowswami died on September 18, 1989. The petitioner on his death applied to the Tahsildar of the Mysore for issue of a survival certificate. The Tahsildar has issued a certificate dated January 22, 1990, to the effect that the petitioner is the sole surviving family member. The petitioner is filing returns of income for the last several years. In his returns, he has showed that he ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Department has a right to recover the said amount, therefore, they have issued these notices under section 226(3) addressed to the managers of various banks to remit the said amount to them. It is also on record that several suits in respect of the mutt's property are pending before the civil courts between the petitioner and the other claimant Krishnamohananda Giri Goswami in fact the Income-tax Department itself has filed several suits for cancellation of the sale deeds executed by the petitioner through his power of attorney holder in favour of various purchasers in respect of several properties of the mutt which is also pending adjudication and, therefore, they contend that the writ petition filed challenging their action is not maintainable. 5. Sri Shankar, learned counsel for the petitioner, assailing the impugned actions of the respondents contend, firstly, that for application of section 226 of the Act the petitioner should be due in any money to the assessee and in default of such payment, his money could be attached at the hands of his garnishee. Secondly, he contends that, even if the petitioner does not pay money in spite of the demand by the Department towards m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, we have to see whether section 226 which deals with other modes of recovery, is attracted to the facts of this case. The relevant provisions are section 226(3), (i), (vi) and (x). "226. Other modes of recovery.-... (3) (i) The Assessing Officer or Tax Recovery Officer may, at any lime or from time to time, by notice in writing 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 Assessing Officer or Tax Recovery Officer either forthwith upon the 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 assessee in respect of arrears or the whole of the money when it is equal to or less than that amount …… (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, then, nothing contained in this sub-section shall be deemed to requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereof to the Income-tax Officer, he shall be 'deemed to be an assessee in default' in respect of the amount specified in the notice. It further provides that the proceedings against him may be taken for realisation of the amount 'as if it were an arrear of tax due from him', in the manner provided in sections 222 to 225. This clause, therefore, specifically provides that, if the person to whom, a notice under sub-section (3) is sent fails to make payment, he shall be deemed to be an assessee in default in respect of the amount specified in the notice. That amount specified in the notice is further deemed to be as if it were an arrear of tax due from him and the said amount could be recovered in the manner provided in sections 222 to 225. Hence, under this clause, the amount from a third party, who is liable to pay to the assessee and to whom the notice under sub-section (3) is given, can be recovered from him by following the procedure under sections 222 to 225, as if he is an assessee in default to the extent of the amount specified in the notice. Further, reading clause (x) of sub-section (3) of section 226, it is apparent that the Legislature has not provided that from the deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a debtor of garnishee and that in default of the garnishee the amounts specified in the notice can be recovered as if a tax due from him deeming the garnishee an assessee in default in the manner provided under sections 222 to 225 on the reasoning that if the Legislature had intended that section 226 would also be applicable, in that event, it would have stopped before the phrase 'in the manner provided under sections 222 to 225'. We do not find any reason to differ from the view taken by the Gujarat High Court. We may buttress the said view with the reason following. Since clause (x) prescribes a particular mode of recovery through the procedure prescribed under sections 222 to 225 in case of default by a garnishee, the recovery is to be made in accordance with those provisions and not otherwise, as was held in Nazir Ahmed v. King-Emperor [1936] AIR 1936 PC 253 (II), followed in Chandra Kishore Jha v. Mahavir Prasad [1999] 8 SCC 266. When clause (x) does not include section 226, it is to be presumed that the Legislature had deliberately and intentionally omitted and had intended to exclude the application of section 226 in a case contemplated under clause (x) of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that a notice in writing specifying the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than the amount, is to be issued to such person requiring him to pay the Assessing Officer or the Tax Recovery Officer, either forthwith upon the money becoming due or being held or at or within the time specified in the notice. 13. On such notice being served, such person has a right to object to the payment of the amount mentioned in the notice on two grounds. Firstly, on the ground that the sum demanded or any part thereof is not due by him to the assessee. Secondly, on the ground that he does not hold any money for or on account of the assessee. This objection should be by way of statement on oath. 14. However, if such person does not object as aforesaid and fails to make payment in pursuance thereof, he shall be deemed to be an "assessee in default" in respect of the amount specified in the notice. The amount so specified may be recovered from such person as if it were an arrears of tax due from him, In the manner provided in sections 222 to 225, and the notice shall have the same effect as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at no point of time, the Department has claimed that the petitioner is due in monies to the mutt. He is neither an assessee nor garnishee. Therefore, the Department cannot call upon the petitioner to pay any money to them at all. Therefore, section 226(3)(i) is not attracted. 17. From the defence of the Department it is clear that they have issued the impugned notice to the garnishee of the petitioner who is holding the money which belongs to the petitioner. Even if the petitioner were to commit default in payment of the money, though money could be recovered from the petitioner, the procedure prescribed for such recovery is as contamed in sections 222 to 225. Section 226 cannot be invoked to recover the money from the petitioner. When that being the case, the impugned notice issued to the various banks where the petitioner's money is kept, falls outside the purview of section 226(3) of the Act and the said notices issued, attachment effected is wholly without jurisdiction. 18. Similarly, if the petitioner has wrongly sold the property belonging to the mutt, the Income-tax Department would not get any right to proceed against the petitioner merely because they have attache ..... X X X X Extracts X X X X X X X X Extracts X X X X
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