TMI Blog1957 (10) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... ner as arrears of income-tax. The petitioner had for the purpose of his business opened an overdraft account with the Indian Bank Ltd., for which he had pledged with them his stock of hides and skins. The limit set to the overdraft by the bank was at ₹ 1,37,500. On the date relevant to the present petition the assessee had drawn on this account a sum of ₹ 1,31,301-2-1 and this sum was shown in the books of the bank as debit to his account. While so, the Additional Income-tax Officer, Second Circle, Madras, who is the respondent in this petition, served a notice on 19th November, 1955, on the Indian Bank under section 46(5A) of the Indian Income- tax Act. In view of the points raised during argument it is necessary to set out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to me as Income-tax Officer further proceedings may be taken by and before the Collector on the footing that this notice has the same effect as an attachment by the collector in exercise of his powers under the proviso to sub-section (2) of section 46. The necessary challan for depositing the money to the credit of Government in the Reserve Bank of India will be supplied immediately on hearing from you. A copy of this notice is being sent to Mr. K.M. Adam (taxpayer). Sd................................... On receipt of this notice, a copy of which was also sent to the assessee, the bank replied to the Income-tax Officer on 23rd November, 1955, stating that there was no amount with them which was payable to Mr. Adam. They also s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance thereof, particularly by the communication dated 24th November, 1955. Section 46 is the provision dealing with the mode of recovery of the tax. Sub-section (5A) enacts: The Income-tax Officer may at any time or from time to time, by notice in writing (a copy of which shall be forwarded to the assessee at his last address known to the Income-tax Officer) 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y part thereof is not due to the assessee, or that he does not hold any money for on on account of the assessee then nothing contained in this section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, to the Income-tax Officer. It will be seen that this provision is analogous to an attachment of a debt or what is commonly termed a garnishee summons. The classes of persons to whom such notice could be served are two: (i) any person from whom money is due or may become due to the assessee; and (2) any person who holds or may subsequently hold money for or on account of the assessee. The question which arises for consideration in the present case is, as to whether a bank, which has afforded ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tomer. Nor does the bank in such a case fall within the expression person from whom money may become due. This refers to a case where there is a debitum in presenti solvendum in futuro, that is, where by reason of an antecedent contract between the garnished and the judgment-debtor a debt automatically emerges, where the maturing into a presently payable debt is not by reason of external compulsion but due to pre-existing facts which of their own motion bring a debt into existence at a predetermined point of time. The propositions that a garnishee order does not accelerate the time for payment and that it does not alter any of the terms of the contract between the garnishee and the judgment debtor relative to the accrual of a debt are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of the loan were thus a repayment of the borrower's money held by the lender, a loan would not result in any debt in favour of the lender which the borrower has to repay. I do not think it is worthwhile pursuing this theory any further. In my judgment when a bank lends money on overdraft and the customer is always in debit there is no stage at which the bank is a debtor to its customer, nor any point of time at which it holds any money of his on his account. Section 46(5A) of the Act cannot on any construction be intended as a credit-freeze, with this feature superadded, that if there was any thawing, the resultant credit released became immediately payable to the Department. Of course, if at any stage the account of the customer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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