K. M. Adam

The petitioner, is a dealer in skins. He was assessed to incometax for the years 1948-49 to 1953-54. The quantum of the tax levied in these assessments was disputed by the petitioner-assessee, but that is not material for the present petition. What, however, is of relevance is that as a result of these assessments a sum of over Rs. 3 lakhs was found due from the petitioner 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 Rs. 1, 37, 500. On the date relevant to the present petition the assessee had drawn on this account a sum of Rs.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 the terms of this notice

" To

The Indian Bank (Head Office), Madras-1

A sum of Rs. 3, 45, 689-14-0 is due from K. M. Adam on account of income-tax and/or penalty. I am to request you under section 46(5A) of the Income-tax Act, 1922, to pay me forthwith any amount due from you to, or held by you for, or on account of, the said Mr. K. M. Adam of 46 Harris Road, Pudupet, Madras 2, up to the amount of arrears shown above, and also request you to pay any money which may subsequently become due from you to him or which you may subsequently hold for or on account of him 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 and penalty. I am to say that any payment made by you in compliance with this notice is in law deemed to have been made under the authority of the taxpayer and my receipt will constitute a good and sufficient discharge of your liability to the person to the extent of the amount referred to in the receiptI am to observe that if you discharge any liability to the taxpayer after receipt of this notice, you will be personally liable to me as Income-tax Officer, II Additional Circle, Madras, to the extent of the liability discharged or to the extent of the liability of the taxpayer for tax and penalties whichever is less

Further if you fail to make payment in pursuance of this notice 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 set out the fact that the assessee had pledged with them his stock of hides and skins and had also executed a mortgage of certain of his properties described in the letter. They then stated the amount due to them, as also the limit set for the overdrafts. A copy of this reply was sent to the assessee, with a note addressed to him reading " Please do not operate on your account until you get the above order of the Income-tax Officer vacated." The Income-tax Officer replied to this on the next day (24th November, 1955) when he said, " With reference to the above, I have to state that as and when you make future payments the above notice comes into play." The result of t