Barin Ghosh, J. - (1.)It is claimed by the income-tax authorities that in the balance-sheet of Visisth Chay Vyapar Ltd. (hereinafter referred to as "VCVL") it has been shown that a sum in excess of Rs. 27 crores is due to it from the petitioner herein. It is also claimed by the income-tax authorities that they are entitled to receive a sum in excess of Rs. 27 crores from VCVL on account of arrear tax. It is the contention of the income-tax authorities that VCVL has failed and neglected to discharge the tax liabilities mentioned above. It is the contention of the income-tax authorities that in order to recover their said dues, steps have been taken under Section 226 of the Income-tax Act, 1961. The said section authorises the Assessing Officer, being the Tax Recovery Officer, to require any person from whom money is due or may become due to the assessee to pay so much of the money as is sufficient to pay the amount due by the assessee. In order to recover money from any such person concerned, he is required to be notified by a notice. The said section authorises the person concerned, to whom such notice is issued, to object. In order to object, the person concerned, in accordance with the said section, is obliged to make a statement on oath. What statement can be made while making such objection has also been provided in the section itself. The statement may be either that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee. The said provision makes it abundantly clear that the moment such a notice is issued by the Assessing Officer, being the Tax Recovery Officer, he steps into the shoes of the assessee who is the creditor of the person notified. Any defence available to such a notified person to the creditor in relation to such claim may entail either of the two situations, which is required to be stated on oath, i.e., (i) the money is not due ; or (ii) the person concerned is not holding the money. When steps were taken against the petitioner under Section 226 of the Act, the petitioner filed a statement on oath but therein did not state either that the sum demanded or any part thereof is not due to VCVL or that the petitioner is not holding any money for or on account of VCVL. What it contended was that the Assessing Officer of the petitioner has doubted the transaction inter se the petitioner and VCVL, which was reflected in the balance-sheet of the petitioner as well as of VCVL, and, accordingly, until such time the doubt so cast by the Assessing Officer of the petitioner is put to rest ultimately by the appellate authority, before whom an appeal is pending, the income-tax authorities should not take steps to recover any money from the petitioner on account of VCVL. The mode and manner in which the Assessing Officer of the petitioner has dealt with the transaction inter se the petitioner and VCVL for assessing the income-tax liability of the petitioner, is no defence of the petitioner to the claim of VCVL as reflected in its balance-sheet and also as reflected in the balance-sheet of the petitioner. Even, if the Assessing Officer as well as the appellate authority come to a definite conclusion to the effect that the transaction was a false transaction and ultimately the same is confirmed by the highest court, the same will not be binding on VCVL, for VCVL is not a party to such assessment proceeding, though it may be summoned in such proceedings for giving evidence, and accordingly, such a finding will not prevent VCVL from recovering its dues from the petitioner irrespective of such finding by the income-tax authorities, unless it supports the case of the Assessing Officer of the petitioner when called upon to give evidence in such proceedings. It is not the case of the petitioner that VCVL has supported the case of the Assessing Officer of the petitioner. In garnishee proceedings initiated by the Tax Recovery Officer against the petitioner by invoking the provisions of Section 226 of the Act the one and only defence of the garnishee was and is its defence to the claim of the creditor and of no one else.
(2.)In that view of the matter, I am of the view that the moment when such statement was made on oath by the petitioner, the same ought to have been rejected inasmuch as such statement was not within the parameter of the section inasmuch as the same did not disclose any defence to the claim of the creditor. The petitioner had approached the Delhi High Court for almost similar purpose. The petitioner had also approached earlier this court and the matter was taken up before the Division Bench, when before the Division Bench it was contended that the Assessing Officer of VCVL was taking one stand and the Assessing Officer of the petitioner was taking yet another stand and, accordingly, that itself is a defence to the claim of the Tax Recovery Officer, Delhi. The Division Bench with anguish expressed that the petitioner must clear its own stand, i.e., which stand it would prefer--the stand of the Assessing Officer of VCVL or the stand of the Assessing Officer of the petitioner and, accordingly, permitted the petitioner to go back to the Commissioner of Income-tax for that purpose. Nothing to that effect was done before the Commissioner of Income-tax. On the last two occasions when the matter was heard I wanted the petitioner to disclose its stand and an adjournment for that purpose was also accorded. No stand has yet been taken. An affidavit has been filed instead, where it has been stated that the matter is under investigation for the purpose of advising the management as to which stand should be taken.
(3.)Be that as it may, the investigation by the petitioner of its own conduct cannot entitle the petitioner to stall the claim of the creditor, which has already obtained a decree against the petitioner, against which though an appeal has been preferred, but no stay of execution of the decree has been granted. Under those circumstances, the petitioner has no defence to the demand made by the Tax Recovery Officer, Delhi, in terms of the provisions contained in Section 226 of the Act.
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