9911796707
TMI Blog1979 (1) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 226(3) of the Income-tax Act, 1961, to pay to me forthwith any amount due from you to or held by you for or on account of the said Sri Narayan Pd. Chowdhury or trustees as noted in letter dt. 10-11-78 up to the amount of arrears shown above, and also request you to pay any money which may subsequently become due from you to him/them or which you may subsequently hold for or on account of him/them up to the amount of arrears still remaining unpaid forthwith on the money becoming due or being held by you as aforesaid as such payment is required by me as amount due by the taxpayer in respect of arrears of income-tax/super-tax/penalty/interest/fine. I am to say that any payment made by you in compliance with this notice is in law deemed to have been made under the authority of the taxpayer and my receipt will constitute a good and sufficient discharge of your liability to the person to the extent of the amount referred to in the receipt." The petitioners also challenge in this application four certificate cases bearing Nos.177/TR/XIV/71-72/XIII ; 826/TR/XIV/72-73/XIII ; 260/TR/ XIV/72-73 and 261/TR/XIV/72-73 and all proceedings taken in respect thereof. The petitioners also cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and residence of the settlor and his wife, Smt. Chanda Devi Chowdhury ". Clause (5) of the said trust deed is important and provides, inter alia, as follows : " (5) That after meeting the expenses mentioned in clause (2) hereof the trustee or trustees shall hold the balance of the net income of the said trust property in seven equal shares, one each of such shares to be held by the trustee or trustees and be appropriated and spent for the maintenance, education, marriage and other expenses and benefits of the said minors, Hemant Kumar Chowdhury, Basant Kumar Chowdhury and Ashok Kumar Chowdhury and the said minor daughters, Kumari Rani and Kumari Renu, and for the maintenance of Smt. Chanda Devi Chowdhury. In the matter of such expenditures the trustee or trustees shall have absolute discretion and his or their decisions in such matters shall be final and binding, if after meeting the aforesaid expenses, there remains any money in the hands of the trustee or trustees the same will form part of the trust under these presents and the trustee or trustees will be entitled to invest the same in such manner and in such securities as the trustee or trustees may in his or their absolute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of the assessee, the person in whose name such asset stands or who is a member of the firm shall, notwithstanding anything to the contrary contained in any other law for the time being in force, be liable, on the service of a notice of demand by the Income-tax Officer in this behalf, to pay that portion of the tax levied on the assessee which is attributable to the income so included, and the provisions of Chapter XVIID shall, so far as may be, apply accordingly : Provided that where any such asset is held jointly by more than one person, they shall be jointly and severally liable to pay the tax which is attributable to the income from the assets so included. " Reading the section it appears to me that in order to include in the income of another, any income from the settled property, notice must be given by service of demand to the person for whose benefit the trust is made or to the trustee of the trust property and upon that notice only that portion of the tax levied on the income which is attributable to the income included from the trust property that can be included in the demand from the beneficiary or the trustees of the trust property. Counsel for the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the revenue to realise the arrear dues of Narayan Prosad Chowdhury were legal in view of the relevant provisions of the Act from this aspect of the matter. It appears from a letter, which I direct to be kept on record of this court, which was produced before me during the hearing of this application, dated 27th December, 1978, that the following amounts were outstanding from Shri Narayan Prosad Chowdhury on his account : " With reference to your letter dated 14-12-78, you are informed that the following amount is still outstanding after giving effect to the AAC's order ; --------------------------------------------------------------------------------------------------------------------------------------------------- Asst. Year Income-tax Int. u/s. 220(2) Total Income-tax Rs. Rs. Rs. 1965-66 15,940 15,671 31,611 1966-67 4,214 3,938 8,152 1967-68 7,063 6,568 13,631 1969-70 3,077 2,467 5,544 1970-71 11,424 7,768 19,192 1971-72 444 235 679 1973-74 11,455 4,181 15,636 1974-75 469 94 563 1975-76 92 7 99 -------------- 95,107 -------------- -------------------------------------------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f money were due. On the other hand, counsel for the petitioner, drew my attention to the averments made in sub-para. (F) of para. 4 of the said affidavit wherein it has been stated that the notices under s. 226(3) of the I.T. Act, 1961, have been issued treating the trust as a revocable trust. It Was submitted on behalf of the petitioners and not without some justification that a trust which has been treated as a revocable trust cannot be, at the same breath, called a void trust because a void trust is a trust which is non-existent in the eye of law. It was further the case of the petitioners that the assessment order had not been proceeded on the basis that the trust was a void one. On the contrary, the assessment order for the assessment year 1973-74 proceeds on the basis that the trust was a revocable trust as it reserved part of the income directly or indirectly to the settlor. I had directed the revenue to produce the assessment order which was done and a copy of the assessment order has been filed before me and given to the petitioner. I direct that the said copy be kept on record of this court. In the said assessment order, the ITO has observed, inter alia, as follows : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompletion thereof, but before the service of notice under rule 2 of the Second Schedule, any assessee creates a charge on, or parts with the possession (by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever) of, any of his assets in favour of any other person, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the said proceeding or otherwise : Provided that such charge or transfer shall not be void if it is made-- (i) for adequate consideration and without notice of the pendency of such proceeding or, as the case may be, without notice of such tax or other sum payable by the assessee ; or (ii) with the previous permission of the Income-tax Officer. (2) This section applies to cases where the amount of tax or other sum payable or likely to be payable exceeds five thousand rupees and the assets charged or transferred exceed ten thousand rupees in value. Explanation.--In this section, ' assets ' means land, building, machinery, plant, shares, securities and fixed deposits in banks, to the extent to which any of the assets aforesaid does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. There is undoubtedly an alternative remedy but the Certificate Officer would not be competent to decide the question as to the title. He would only be competent to decide as to who was in possession of the property and undoubtedly on the finding of the ITO and the notice that I have set out before, the trustees were in possession of the income of the property. Therefore, this insistence on perusing the alternative remedy to this end would be insisting on an empty formality in the facts and circumstances of the case. But the more fundamental objection in this case is that notice has been issued under s. 226(3) of the I.T. Act, 1961, to the different tenants and other creditors for payment of the amounts due to the income-tax department. Counsel for the revenue, at one point of time, sought to urge that the persons to whom the notice had been given were free to ignore the notices and pay to the legal owners and if they paid to others in discharge of the liability irrespective of as to who are the legal owners of the property then those debtors would not get any discharge. But the difficulty in this case is that in the notices under s. 226(3) it has been indicated that amounts were ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
