This is a petition under articles 226 and 227 of the Constitution by Tara Chand, who appears to be working as a broker in the matter of transactions relating to second-hand cars at Amritsar. It is said that he carried out several transactions at the instance of the sons of late S. Pratap Singh Kairon, namely, Shri Surinder Singh Kairon and Shri Gurinder Singh Kairon. Their income-tax cases were being investigated by Shri Anand Prakash, Income-tax Officer, who was in charge of the Special Investigation Circle 'B', Amritsar. It is said that during the course of the enquiries which he was making, he got into touch with the petitioner who was summoned by him. The petitioner appeared before him on 13th January, 1965, and his statement on oath was recorded. In that statement the petitioner is stated to have given details of all the transactions of which he was aware pertaining to purchase and sale of the cars by Shri Surinder Singh Kairon and Shri Gurinder Singh Kairon. the petitioner was served with a notice (annexure 'B') dated 24th May, 1965, by the aforesaid Income-tax Officer under section 226(3) of the Income-tax Act, 1961. It was stated therein that a sum of Rs. 2,83,752.98 was due from Shri Surinder Singh Kairon on account of income-tax and that the petitioner should not pay any amount due from him to him or held by him on his account up to the amount of arrears mentioned above. It was further stated that if the petitioner discharged any liability to the taxpayer after receipt of the notice, he would be personally liable to the Income-tax Officer to the extent of the liability discharged. On 3rd June, 1965, two statements of the petitioner were recorded by Shri Anand Prakash, Income-tax Officer, at Delhi. These statements were not recorded on oath and in one of them, which was signed by the petitioner, he purported to make an admission that a sum of Rs. 49,000 was due from him to Shri Surinder Singh Kairon. The Income-tax officer addressed a letter dated 25th August, 1965 (annexure 'C'), to the petitioner saying that he had promised to deposit dues of Rs. 52,000, which were payable to Shri Surinder Singh Kairon, and, since he had not deposited the amount, he was called upon to show cause why attachment notice should not be issued against, him. By a letter dated 9th September, 1965 (annexure 'D'), the petitioner expressed surprise at the contents of the letter of the Income-tax Officer dated 25th August, 1965. He further stated :
'I am an illiterate person. I cannot read or write. Your goodself has been calling me in your office at Amritsar regarding certain enquiries against Shri Surinder Singh Kairon. I have been telling you whatever I knew regarding his affairs considering it my duty towards the National Government. You once called me at Delhi through Shri Surinder Singh Kairon when I was there on a private visit. You asked me to sign a piece of paper on which you had written something and I signed the paper thinking that it is again something regarding the income-tax enquiries against Shri Surinder Singh Kairon.'
The Income-tax Officer sent a reply dated 15/16th September, 1965 (annexure 'E'), pointing out that from the previous statements made by the petitioner, it stood admitted that he was liable to pay the amount to Shri Surinder Singh Kairon and, therefore, the petitioner could not be permitted to resale out of that position.
An order of attachment was then issued on 16th September, 1965, and the petitioner was served with a show-cause notice as to why he should not be detained in a civil prison as he had failed to pay up the amount in question. The petitioner sent a letter to the Income-tax officer on 27th October, 1965, accompanied with an affidavit giving details of the transactions relating to the sale of cars in so far as they concerned Shri Surinder Singh Kairon and Shri Gurinder Singh Kairon and denied liability of any kind to them or that any amount was due to them from him. thereafter, the present petition was filed challenging the aforesaid attachment order dated 16th September, 1965, and the show-cause notice dated 11th October, 1965, and seeking suitable writs and directions that the respondents should proceed to carry out the recovery proceedings in compliance with the provisions of section 226(3)(vi) of the Income-tax Act.
Now, section 226(3)(i) provides :
'The Income-tax 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 Income-tax Officer either forthwith upon 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.'
Clause (vi) of the same sub-section reads thus :
'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 required such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the Income-tax Officer to the extent of his own liability to the assessee on the date of the notice, or to the extent of the assessees liability for any sum due under this Act, whichever is less.'
It is contended by Mr. Bhagirath Dass, learned counsel for the petitioner, that as soon as an objection was made by a statement on oath that the sum demanded was not due to the assessee or that the objector did not hold any money for or on account of the assessee, then the second part of the aforesaid clause was to come into operation and the Income-tax Officer was bound to discover first whether the statement on oath was false in any material particular and then only any personal liability could be fastened on the objector. It is pointed out that such a statement on oath was sent by the petitioner on 27th October, 1965, and that the Income-tax Officer was not competent to proceed thereafter except in compliance with the second part of clause (vi) of section 226(3) of the Act.
The position taken up on behalf of the Income-tax Officer is that the objection which was made by the petitioner on 27th October, 1965, was not bona fide and that at any rate he had admitted in his previous statements his liability towards Shri Surinder Singh Kairon and Shri Gurinder Singh Kairon and, therefore, it was no longer necessary to discover whether the statement made on oath was false in any material particular as required by clause (vi). The answer on behalf of the petitioner to this is that no such admissions were made by the petitioner at all and that he, being an illiterate person, had only signed certain statements on 3rd June, 1965, as desired by the Income-tax Officer and that the real objections to the notice were contained in the letter dated 27th October, 1965, which was supported by an affidavit. It is emphasised that the statement previously recorded on 13th January, 1965, was before the issuance of the notice dated 24th May, 1965, and could be of no avail to the respondents who were bound to comply with the provisions contained in clause (vi) of section 226(3).
The language of the above provision on which Mr. Bhagirath Dass has relied is quite clear. When a notice has been served under section 226(3)(i), the person on whom the notice has been served should file objections supported by a statement on oath that the sum demanded is not due to the assessee, etc. If, however, it is discovered that such statement was false in material particulars, then alone that person shall be personally liable to the Income-tax Officer to the extent mentioned in clause (vi). In the present case the petitioner did not send any objection which was supported by a statement on oath as soon as he received the notice. On 3rd June, 1965, two statements of the petitioner were recorded by the Income-tax Officer and he did not choose to send any objections supported by an affidavit. As stated previously, the Income-tax Officer sent him a letter dated 9th September, 1965, saying categorically, apart from other matters, that there was nothing due from him to Shri Surinder Singh Kairon. The Income-tax Officer sent his reply dated 15th of September, 1965, which contained a virtual rejection of the objections taken by the petitioner. This was followed by an attachment order dated 16th September, 1965, and the show-cause notice dated 11th October, 1965, which have been challenged in the present petition. It is significant that the petitioner waited till 27th October, 1965, after these orders had been issued, when he sent a letter containing objections supported by an affidavit presumably under legal advice. In my opinion, it was not open to the petitioner to have waited till after the attachment order, etc., had been issued for filing objections as contemplated by clause (vi) of section 226(3) of the Act. Once he sent his objections earlier which were not supported by an affidavit which were rejected and the attachment proceedings were taken, it was too late for the petitioner to take advantage of the provisions contained in clause (vi).
Mr. Bhagirath Dass has submitted that no period of limitation has been prescribed for the purpose of sending objections under clause (vi) but it is plain from the language employed therein that the proper stage when such objections should be sent is the time when the notice is received under section 226(3)(i). The law does not contemplate that he can first send objections without oath and wait till it suits his convenience to file an objection supported by a statement on oath. At any rate, the circumstances of this case are such that this court would be most reluctant to exercise its discretion under article 226 of the Constitution in favour of the petitioner.
Mr. Awasthy, learned counsel for the respondent, has invited my attention to a Bench decision of this court in Civil Writ No. 1996 of 1963, in which it was held that any objections which a garnishee can file under section 46 (5A) of the Indian Income-tax Act, 1922, which has now been replaced by section 226(3)(vi) of the new Act, must be factual, unambiguous and bona fide. In that judgment it was pointed out that the phraseology of the new section is different. It is not possible, therefore, to derive much assistance from that judgment.
For the reasons given above this petition is dismissed but, in the circumstances I make no order as to costs.