SHIBU S NAIR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioners claim to be employees of the third respondent-company which supplies security personnel to various companies including the second respondent. THEy are at present employed by the third respondent for looking after the security matters of the second respondent-company. THE petitioners are challenging exhibit P-1 income-tax recovery notice dated June 14, 2001, issued by the Deputy Commissioner of Income-tax, Company Circle II, Madurai, to various companies, the names and addresses of which are contained in the list attached to exhibit P-1, which includes the second respondent herein. Exhibit P-1 is a garnishee proceeding initiated for recovery of arrears of income-tax due from the third respondent, i.e., the petitioner's employer-company. THE petitioners are challenging the said notice on the ground that the amounts to be paid by the second respondent to the third respondent are to be utilised towards payment of salary to the petitioners and if income-tax is recovered by the Income-tax Department by recovering the amount due by the second respondent to the third respondent, the petitioners' rights are affected. THE petitioners rely on the protection conferred under the proviso to Section 226(2) of the Income-tax Act, 1961, which gives an immunity from attachment in respect of part of salary exempt from attachment in execution of a decree of a civil court under Section 60 of the Civil Procedure Code. According to the petitioners, the amount of money due from the second respondent to the third respondent, now attached under exhibit P-1 notice, partakes of the character of "salary" because on receipt of the said money, the third respondent will disburse salary to the petitioners who are admittedly employees of the third respondent.

(2.) I have heard counsel for the petitioners at length. However, since I do not feel that the original petition is maintainable, I proceed to dispose of the same at the admission stage without notice to the respondents. Since the petitioners claim immunity from attachment of the amount payable, or that may become payable, by the second respondent to the third respondent under the proviso to Section 226(2) of the Income-tax Act, I extract hereunder Section 226 in so far as it is relevant for the purpose of this original petition :

(3.) THE next question is the petitioners' claim of immunity under the proviso to Section 226(2) of the Income-tax Act. It is obvious from the said sub-section that immunity is against attachment of part of salary in recovery proceedings initiated against an employer for recovery of tax due from an employee. Exhibit P-1 garnishee proceedings are initiated against the creditors for recovery of arrears of tax due from the third respondent-company which happens to be the employer of the petitioners. THE attachment is neither on the salary of the petitioners nor is the notice served on the employer of the petitioners. THErefore, the proviso to Section 226(2) has no application and the petitioners cannot claim any immunity from attachment under the proviso to Sub-section (2) of Section 226. As already stated exhibit P-1 is in the nature of recovery proceedings initiated against the defaulter company, the assessee, which is the third respondent. THE amount payable by the second respondent to the third respondent admittedly is under a contract between them for supply of security personnel and whatever be the basis of payment for supply of security personnel, it is still payment of contract amount by the second respondent to the third respondent in accordance with the terms and conditions of contract between them. THEre is absolutely no immunity from attachment of any amount payable by the second respondent to the third respondent under the contract between them. THErefore, the immunity claimed under the proviso to Section 226(2) is not available to the petitioners. If the petitioners have any claim against the third respondent towards arrears of salary, it is for them to approach the concerned authority or court as the case may be claiming the amount, get an award and attach the amount payable by the second respondent to the third respondent and if entitled to claim priority over income-tax arrears. So long as this court has no jurisdiction under Article 226 of the Constitution of India to decree the salary arrears payable by the third respondent which is a company at Madras to the petitioners, this court is disabled to consider any priority for the petitioners' claim over the arrears of income-tax due from their employer to the Government. THEy cannot indirectly question exhibit P-1 proceedings which only serves the purpose of defeating the recovery proceedings initiated for recovery of income-tax arrears due from the third respondent.