SHILU Vs. CIT

JUDGEMENT

(1.) THE petitioners claim to be employees of 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 Ext. P1-income tax recovery notice dated 14.6.2001 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 Ext. P1, which includes the second respondent herein. Ext. P1 is a garnishee proceeding initiated for recovery of arrears of income tax due from the third respondent, i.e., the petitioners' 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 S.226(2) of the Income Tax Act 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 S.60 of the CPC. According to the petitioners, the amount of money due from the second respondent to the third respondent, now attached under Ext. P1 notice, partakes 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 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 S.226(2) of the Income Tax Act, I extract hereunder S.226 in so far as it is relevant for the purpose of this Original Petition: 226. (1) Where no certificate has been drawn up under Section .222, the Assessing officer may recover the tax by anyone or more of the modes provided in this section. (1A) Where a certificate has been drawn up under S.222, the Tax Recovery Officer may, without prejudice to the modes of recovery specified in that section, recover the tax by anyone or more of the modes provided in this section. (2) If any assessee is in receipt of any income chargeable under the head "Salaries", the Assessing Officer or Tax Recovery Officer may require any person paying the same to deduct from any payment subsequent to the date of such requisition any arrears of tax due from such assessee, and such person shall comply with any such requisition and shall pay the sum so deducted to the credit of the Central Government or as the Board directs: Provided that any part of the salary exempt from attachment in execution of a decree of a civil court under S.60 of the Code of Civil Procedure, 1908 (5 of 1908) shall be exempt from any requisition made under this sub-section. (3) (i) The Assessing Officer or Tax Recovery Officer may, at any time 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 money the money 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.

(3.) THE garnishee proceedings is a routine proceedings provided in every taxing statute for recovery of tax, and there is nothing unusual about Ext. P1. The petitioners may be the employees of the third respondent and the averment of the petitioners that the third respondent may owe arrears of salary to the petitioners also may be true. However, unless the petitioners establish their claim of priority over income tax dues, the petitioners cannot stall the recovery proceedings initiated under S.226(3) of the Income Tax Act. There is nothing on record to indicate that the petitioners have got any order under the Payment of Wages Act or from any other forum showing the specific amount of arrears due to them from the third respondent so as to enable the petitioners or anyone of them to attach the amounts receivable by the third respondent from the second respondent. In the absence of any such claim of priority over income tax dues due from the employer to the Government, the petitioners cannot challenge Ext. P1 notice against which the petitioners cannot have any direct grievance. If at all anybody is aggrieved by Ext. P1 notice, it is the third respondent, which has not approached this Court against Ext. P1 notice, nor do they appear to have made alternative arrangement for getting Ext. P1 revoked by the authority, which issued the same one year back. On the face of it, the Original Petition itself is probably the sinister move by the third respondent to prevent income tax recovery by sending it's employees to this Court with this O.P. Since the petitioners have no direct grievance nor any claim of priority over the income tax dues, I do not think that they have any right to question the recovery notice against the employer. On this ground alone, the Original petition is liable to be dismissed.