Money paid by garnishee in the date of attachment though said money not held by him.

This is a petition under Article 226 of the Constitution. The petitioner prays for the issue of a writ of mandamus or any other appropriate writ, order or direction, directing the Fourth Income-tax Officer, City Circle V, the first respondent, to forbear from collecting from it the sum of Rs. 20,000 in pursuance of his notices under section 46 (5-A) of the Indian Income-tax Act dated 18th June, 1959 and 21st March, 1961.

The facts are, briefly, as follows. The petitioner is a firm carrying on business as producer of films. The first respondent issued a notice to the petitioner on 18th June, 1959, under section 46 (5-A) of the Income-tax Act stating that it had engaged the services of certain T. S. Baliah, a cine artiste, and, that the remuneration payable by the petitioner to Baliah stood attached and that it should be credited to the Government as he was in arrears of income-tax to the extent of about Rs. 46,819-15. The petitioner sent a reply on 26th June, 1959, and submitted that it had not engaged Baliah for acting in any film produced by it and that there was no subsisting service agreement between them. The Department did not send any further notice as apparently it was satisfied that the petitioner did not owe any money to Baliah. Two years elapsed and in the meantime the arrears of tax payable by Baliah mounted to Rs. 86,111-12. On 21st March, 1961, the Department issued a further notice to the petitioner under section 46 (5-A) of the Act attaching all payments due by it to Baliah.

It must be mentioned that in between these two notices the petitioner had entered into a contract with Baliah on 28th March, 1960. The contract was that Baliah should play a role in the petitioner’s production No. 2 (Tamil) for a consolidated remuneration of Rs. 20,000. On the date of the contract Baliah is said to have been paid a sum of Rs. 7,000. It is alleged that there were two further payments by the petitioner to Baliah, Rs. 6,000 in cash on 9th February, 1961 and Rs. 7,000 in cash on 18thMarch, 1961. These payments are borne out by the books of account maintained by the petitioner.

On receipt of the notice from the Department in March, 1961, the petitioner replied stating that there were no payments due or payable to Baliah at that time. Finding that the petitioner had entered into a contract with Baliah subsequent to the first notice from the Department under section 46 (5-A) the Income-tax Officer addressed another communication to the petitioner on 26th April, 1961, in these terms:

“I wish to draw your attention to this office notice under section 46 (5-A) issued to you on 18th June, 1959 and your reply dated 26th June, 1959, wherein you had stated your inability to pay the dues to Shri Baliah to the Income-tax Department. I have to, therefore, presume that the payment of Rs. 20,000 made by you to Shri T. S. Baliah is in violation of the notice under section 46 (5-A) issued on 18th June, 1959 and as such I cannot take cognizance of this payment. I therefore request you to pay the sum of Rs. 20,000 to the Income-tax Department within three days from the receipt of this letter failing which I will be constrained to take other steps for recovering the amount from you.”

The petitioner pointed out in its letter dated 26th June, 1961 to the Incometax Officer that there was no contract with Baliah on 18th June, 1959, that no money was held by it on his account on that date, that the agreement with Baliah was subsequent to the notice dated 18th June, 1959, that Baliah had received all the amounts due to him under that contract, and that it had not violated the provisions of section 46 (5-A) of the Act in making the disbursements to Baliah prior to the issue of the second notice, though subsequent to the first notice. The Department refused to accept the contentions of the petitioner and directed it to pay the money on or before 7th September, 1961. The petitioner has therefore approached this Court for the issue of a writ of man