TMI Blog1987 (9) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... de under section 226(4) of the Act by the Income-tax Department, to decide whether the amount claimed by the Income-tax Department is a debt due from the assessee. In Case No. 181 of 1985 in the Court of the Sub-Judge, Cuttack, the judgment-debtor deposited a sum of Rs. 3,08,533.10 to the credit of the decree obtained by the decreeholders who are the petitioners before us. The Income-tax Officer filed an application on November 20, 1985, before that court under section 226(4) of the Income-tax Act, 1961, for adjustment of the aforesaid amount, namely, Rs. 3,08,533.10, against alleged income-tax dues of the decreeholders (appellants herein) amounting to Rs. 6,88,244. The decreeholders objected on the ground that no notice of demand as requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Income-tax Officer preferred a revision by way of Civil Revision No. 543 of 1986 (ITO v. Manmohanlal [1987] 168 ITR 56) in the High Court of judicature at Cuttack. The learned single judge who disposed of the revision petition took the view that a civil court to which a petition or application has been made under section 226(4) of the Income-tax Act had no jurisdiction to decide the questions of fact, such as absence of service of a notice of demand for arrears of tax. It was held by him that once an application was made by the Income-tax Officer under subsection (4) of section 226, no discretion was given to the civil court at all to make an investigation as to whether the assessment of tax was according to law or if the tax was in ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overy Officer has nothing to do with an application under section 226(4) made by the Income-tax Officer to a court in which there is money lying to the credit of the assessee in default. If such an application is made, it is certainly open to the court to determine as to whether there has been proper notice of demand served on the decreeholder (assessee in default) according to law. It is only after the court is satisfied of this that the court can proceed to pay over the amount demanded to the Income-tax Officer, It is settled by authority long accepted that tax can be recovered from an assessee only when it becomes a debt due from him and that it becomes a debt due when a notice of demand calling for payment of the tax has been served o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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