LexINCOME-TAX OFFICER, MADRAS versus BUDHA PICTURES, MADRAS
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INCOME-TAX OFFICER, ID.ORAS
v.
BUDHA PICTURES, MADRAS
April 5, 1967
[J. C. SHAH, S. M. S!KRI AND V. RAMASWAMI, JJ.]
. Indian Income-tax Act, 1922, s. 46(5A )-Notice under section to
who1n can be given-There must be
subsisting
relationship
between
asJtssee and person to whom notice is gi-.,·en.
The respondent a film producing company was served a notice under
s. 46(5A) by the Income-tax Officer on June 18, 1957, asking it to pay
to the Income-tax Officer any amount due from the company or held by
it for or on account of 'B' an actor. On June 26" 1959 the company re-
plied that it bad not engaged 'B' foc its current production and there
was no contract with him and consequently it could not comply with the
notice. On March 28, 1960 the company
signed a contract with 'B'
agreeing to pay him Rs. 20,000 for a role in its current production. Tho
amount was paid to him in three instalments on March 28, 1960, Februa·ry
~. 1961 and March 18, 1961.
On March 22, 1961 the Income-tax Offl·
cec sent to the company another notice under s. 46(5A) to which the
company replied that there were no payment due and payable to 'B' on
the date of receipt of the J}otice. The Income-tax Officer held that the
payment of Rs. 20,000 to .'B' was in violation. of the notice under
s. 46(5A) issued on June 18, 1959 and requested the company to pay the
said amount to the Income-tax department. The
company filed a writ
petition in the High Court which decided in its favour holding that the
section required the subsistence of a similar relationship as between
a
garnishee and the assessee. The department appealed to this Court.
HELD : Jn s. 46(5A) the legislature contemplates a subsisting rela-
tionship of which the Income-tax Officer gets information and which can
reasonably lead to the re<:overy of arrears. [ 429C]
The expression "may become due" or
11may subsequently hold money"
suggest in the context a subsisting relationship between the person served
with a notice and the assessee; e.g. assessee's employer or banker
or
debtor, or a person paying an annuity to him; they do not suggest a bank
which he has never dealt with, a person he has never lent money to or
dealt with, or all persons who may possibly in the future employ an
asses.ee out of job or work. The section cannot apply to all possible
employers or traders
[429F]
Since there was no subsisting relationship between the company and
'B' at the time when the notice was issued the recovery of Rs. 20,000
from the company was not justified.
CIVIL APPELLATE JURISDICTION :
Civil Appeal No. 401 of
1966.
Appeal by special leave from the judgment and order dated
October 10, 1963 of the Madras High Court in Writ Petition No.
71 of 1962.
H
T. V. Viswanatha Iyer, S. K. Aiyar, S. P. Nay.var for R. N.
Sachthey, for the appellants.
K. Srinivasan and R. Gopa/akrishnan, for the respondent.
426
SUPUMB COUllT REPORTS
[1967) 3 S.C.R.
The Judgment of the Court was delivered by
Slkri, J. This appeal by special leave is directed against the
judgment of the Madras High Court allowing the petition filed
under art. 226 of the Constitution by Budha Pictures, Madras,
respondent before us. The respondent had, inter alia, prayed for
a writ of mandamus or such other appropriate writ, order or direc-
tion in the nature of a writ directing the 4th Income-tax Officer,
City Circle V, Madras, to forbear from {;Ollecting from the respon-
dent the sum of Rs. 20,000/- in pursuance of his notices dated
June 18, 1959, and March 21, 1961, issued under s. 46(5A) of
the Indian Income-tax Act, 1922.
These notices came to be
issued in the following circumstances :
One, T. S. Balaiah, a cine artist, was apparently in arrears of
income-tax. The III Additional Income-tax Officer sent a letter
dated Julie 18, 1959 to the respondent saying :
·
"I understand that you have engaged the services of
Shri T. S. Balaiah for a film being produced by you.
As the above gentleman is in arrears of income-tax, I
herewith enclose a notice under Section 46(5A) of the
I. T. Act, attaching the remuneration payable by you to
Shri Balaiah. Please credit to the Government account
all amount that is and will become payable to him."
The first paragraph of the notice reads as under :
"A sum of Rs. 46819-15 is due from Shri T. S. Baliah
on account of Income-tax and/ or penalty, I am to re-
quest you, under Section 46(5A) of the Income-tax Act,
1922, to pay to mExcerpt shown. Read the full judgment & AI analysis in Lexace.