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2014 (7) TMI 1004 - HC - Income TaxNotice u/s 226(3) – Amount due from garnishee as tax arrears – Held that:- The Tax Recovery Officer had issued a notice dated 17.3.2008 treating the assessee to be an assessee in default on account of non-payment of the amount as per the notice u/s 226(3) of the Act - revenue knew about the petitioner's address at Varanasi but chose to sent the notice at Kanpur's address - The initial notice sent u/s 226(3) of the Act was not served as it was not sent at the appropriate address and consequently the action taken by the revenue pursuant to the notice u/s 226(3) of the Act without ensuring service becomes bad in law - the irregularity, if any, in non-service of the notice u/s 226(3) of the Act is deemed to be cured upon the assessee's subsequently appearing on 15.4.2008 and participating in the proceedings by production of its books of account and filing an affidavit of denial on 17.4.2008. The assessee has contended that it had advanced certain sums of money to the petitioner and, therefore, the petitioner is its debtor, but, the petitioner has denied this assertion - no steps have been taken by the assessee, namely, M/s Rich Capital and Financial Services Ltd. initiating any proceeding for recovery of that amount before any forum or any appropriate court of law - Since the petitioner had appeared and participated in the proceedings, the order of the Tax Recovery Officer treating the petitioner as an assessee in default cannot continue any longer. The denial by the petitioner to pay any amount, the attachment made by the Tax Recovery Officer cannot continue any further, especially when the Court finds that till date no inquiry has been made by the revenue into the genuineness of the affidavits filed by the petitioner - the order treating the petitioner as an assessee in default cannot be sustained and is quashed – there was no justification in continuing with the attachment order and it is also quashed - A writ of mandamus is issued commanding the Tax Recovery Officer to ensure that 1,70,000 equity shares of Jhunjhunwala Vanaspati Ltd. is transferred again in the Demat Account of the petitioner with Karvy Stock Broking Ltd. within two weeks from the date of the production of a certified copy of the order. If any dividend was received by the Tax Recovery Officer on these shares, the said amount shall also be transferred to the petitioner – Decided in favour of Assessee.
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