The court held that proceedings under Section 226 (3) of the Income-tax Act, 1961, being in the nature of garnishee proceedings, the general law with regard to garnishee proceedings should be applied. It further held that the money payable by the Coal Board to the petitioner-company as assistance could not be attached towards payment of income-tax liabilities, as it would lead to a breach of the statutory obligations of the Coal Board and the conditions attached to the grant of assistance.

( 1 ) THE petitioner, Coal Products Private Ltd. , challenges in this application a notice dated the 22nd February, 1967, issued by the Income-tax Officer, "m" Ward, Companies District II, Calcutta, to the Secretary, Coal Board, Government of India,

( 2 ) THE material portion of the impugned notice, which is one under Section 226 (3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), is in the following terms :"a sum of Rs. 12,94,782. 43 is due from M/s. Coal Products Pvt. Ltd. Nutandanga, Burdwan, Calcutta, Add. 1195 C. R. Avenue, Calcutta, on account of income-tax/super-tax/penalty/interest/fine. You are hereby required under Section 226 (3) of the Income-tax Act, 1961, to pay forthwith any amount due from you to or held by you for, or on account of the said M/s. Coal Products Pvt. Ltd. , upto the amount of arrears shown above, and also request you to pay any money which subsequently became due from you to him/them or which you may subsequently hold for or on account of him/them up to the amount of arrears still remaining unpaid, forthwith on the money becoming due or being held by you as aforesaid as such payment is required to meet the amount due by the taxpayer in respect of arrears of income-tax/super-tax/penalty/interest/fine, I am to say that any payment made by you in compliance with this notice is in law deemed to have been under the authority of the taxpayer and ray receipt will constitute a good and sufficient discharge of your liability to the person to the extent of the amount referred to in the receipt"

( 3 ) THE principal contention urged by Mr. Sankar Ghosh appearing on behalf of the petitioner is that the money which is due or may become due from the Coal Board to the petitioner-company is by way of assistance for certain specific purposes. The Coal Board is a statutory authority set up under the provisions of the Coal Mines (Conservation and Safety) Act, 1952. The powers of the Board to utilise the money received by it are limited by the provisions of the above Act. It has no power to utilise the money for any other purpose.

( 4 ) IN support of this contention, Mr. Ghosh draws my attention to Section 12 of the above Act which is in the following terms :"12. Money received by the Board to be credited to the fund.-- (1) The sum referred to in Section 11 and any other money rectived by the Board shall be credited to a fund to be called the Coal Mines Safety and Conservation Fund which shall be applied by the Board, in such manner and subject to such conditions as may be prescribed to- (a) meeting the expenses in connection with the administration of the Board and the furtherance of the objects of this Act; (b) the grant of stowing materials and other assistance for stowing operations to the owners, agents or managers of coal mines ; (c) the execution of stowing and other operations in furtherance of the objects of this Act; (d) the prosecution of research work connected with safety in coal mines or conservation and utilisation of coal; (e) meeting the cost of administering the fund and the expenses in connection with advisory committees ; (f) the grant to State Governments, research organisations, local authorities and owners, agents or managers of coal mines of money in aid of any scheme approved by the Central Government in furtherance of the objects of this Act; (g) any other expenditure which the Central Government directs to be defrayed out of the Fund. (2) The Board shall keep accounts of the Fund, and such accounts shall be examined and audited by the Comptroller and Auditor-General of India at such times and in such manner as he deems fit and the report of the Comptroller and Auditor-General of India shall be laid, as soon as may be, before Parliament. "

( 5 ) MY attention is also drawn to rules 49, 52 and 54 of the Coal Mines (Conservation and Safety) Rules, 1954, which are in the following terms :"49. Purposes for which assistance may be granted.-- (1) The Board may g