BUDDHA PICTURES Vs. INCOME TAX OFFICER FOURTH

JUDGEMENT

(1.) THIS is a petition under Article 226 of the Constitution. The petitioner prays for the issue of a writ of mandamus or any other appropriate writ, order or direction, directing the Fourth Income-tax Officer, City Circle V, the first respondent, to forbear from collecting from it the sum of Rs. 20,000 in pursuance of his notices Under Section 46(5-A) of the Indian Income-tax Act dated 18-6-1959 an;! 21-3-1961.

(2.) THE facts are briefly as follows. THE petitioner is a firm carrying on business as producer of films. THE first respondent issued a notice to the petitioner on 18-6-1959 Under Section 46(5-A) of the Income-tax Act stating that it had engaged the services of a certain T. S. Baliah a cine artist, and, that the remuneration payable by the petitioner to Baliah stood attached and that it should be credited to the Government as he was in arrears of income-tax to the extent of about Rs. 46,819-15. THE petitioner sent a reply on 26-6-1959, and submitted that it had not engaged Baliah for acting in any film produced by it and that there was no subsisting service agreement between them. THE department did not send any further notice as apparently it was satisfied that the petitioner did not owe any money to Baliah. Two years elapsed and in the meantime the; arrears of tax payable by Baliah amounted to Rs. 86,1.11-12. On 21-3-1961, the department issued a further notice to the petitioner Under Section 46(5-A) of the Act attaching all payments due by it to Baliah.

(3.) THE section provides a machinery for the department to collect tax arrears from the debtors of the assessees. It is in substance the familiar garnishee proceedings under the Civil Procedure Code. THE basic foundation would appear to be the subsistence of a relationship of a debtor and creditor, between the garnishee and the assessee. THE scope of this section came in for consideration by this Court in a different context. That is the decision in Adam v. Income-tax Officer, 1958-33 ITR 26 : (AIR 1958 Mad 181). In that case, an assessee was in arrears of tax He had an overdraft account with a banker THE limit of overdraft allowed by the banker was Rs. 1,37,500, of which the assessee had drawn up to Rs. 1,31,301/ . This latter amount was debited to the assessee in the banker's books of account. THE Income-tax Officer served a notice on the banker to the effect that the banker should pay to the officer any amount due or becoming due from the banker to the assessee of any money which the banker may hold subsequently for or on account of the assesses. upto the amount of arrears THE banker then informed the officer that there was no amount which was payable to the assessee and that the assessee had pledged his goods and executed a mortgage of certain properties. THE Income-tax Officer replied by letter dated 24-11-1955 that the notice will come into operation as and when the assessee make future payments. THE Banker refused to pay the assessee any further sum on his overdraft account and the assessee filed a petition" under Article 229 of the Constitution questioning the validity of the notice and the letter. This Court held that an unutilised overdraft account does not render the banker a debtor in any sense and the banker is. therefore, not a person from whom money is due to the customer. It further held that the banker in such a ease is not a "person from whom money became due" Accordingly a writ was issued. Rajagopala Aiyangar, J., as he then was, referring to the provision of Section 46(5-A), in 1958-33 ITR 26 (AIR 1958 Mad 181) observed thus at page 31.