Gauhati H.C : This is an application under Art. 226 of the Constitution of India assailing the legality and validity of the direction issued by the Asstt. CIT (Investigation Circle), Shillong, respondent No. 2, under subs. (3) of s. 226 of the IT Act, 1961.

JUDGMENT

D.N. CHOWDHURY, J. :

This is an application under Art. 226 of the Constitution of India assailing the legality and validity of the direction issued by the Asstt. CIT (Investigation Circle), Shillong, respondent No. 2, under subs. (3) of s. 226 of the IT Act, 1961.

By the impugned notice respondent No. 2 in exercise of power conferred under s. 226(3) of the IT Act, 1961 (hereinafter referred to as “the Act”), in connection with income-tax proceedings in respect of Sri Binod Kumar Bawri, the Chief General Manager (Planning), Department of Telecommunications, Bawri Mansion, Dhankheti, Shillong, was directed to deposit the full rent payable in respect of premises to the account of the Asstt. CIT with effect from the month of October, 1994, until further notice.

The above notice is, thus, challenged in the writ petition on the ground that Shri Binod Kumar Bawri is shown as the owner of the property in question but in fact does not own the premises. The petitioners in this proceeding put up their claim on the property as the co-owners of “Bawri Mansion” and, therefore, questioned the above notice as illegal and without jurisdiction. According to the petitioners, in view of the family partition between the two main sharers, the plot of land and building in question fell to the share of the seven petitioners and after 31st July, 1983, Sri Binod Kumar Bawri ceased to have any share in the property, namely, Bawri Mansion. The petitioners submitted income-tax return and in the said return the income receipt from the Bawri Mansion as co-owner was reflected and in support of this contention the petitioners referred to the intimation under s. 143(1) of the IT Act and appended the same to the writ petition. In the writ petition, the petitioners indicated about the income-tax proceeding initiated against Shri B. K. Bawri for recovery of the outstanding on account of dues receivable from him by the Department. It is also averred in the petition that the petitioners came to learn that Mr. Binod Kumar Bawri agreed to pay a sum of Rs. 1,00,000 (one lakh) per month towards the demand made by the IT Department till the matter was sorted out by the co-owners and accordingly Shri B. K. Bawri was making payment of Rs. 1 lakh per month to the Department and the Department was accepting it. It was also stated in the petition that Sri B. K. Bawri might take advantage of the fact that the said plot of land stood in his name and the lease was not renewed since 1978. Petitioner No. 1, therefore, instituted a title suit in the Court at Calcutta against Sri Binod Kumar Bawri and the said suit is still pending. On this ground mainly the impugned notice was challenged. The respondents submitted their affidavit denying and disputing the claim made by the petitioners. According to therespondents, at all relevant times, Sri Binod Kumar Bawri was the owner of the property and accordingly the respondents lawfully directed respondent No.3 to pay the amount due and payable by the assessee, Sri Binod Kumar Bawri, the owner of the building. The respondents in support of their assertion referred to the sale deed for land executed on 4th Nov., 1960, showing that the plot of land was purchased in the name of Sri Binod Kumar Bawri by his adoptive father and natural guardian during the minority of Sri B. K. Bawri. The respondents also referred to the building permission that was obtained by Sri Binod Kumar Bawri for construction of the Bawri Mansion. The loan agreement was entered into between Sri Binod Kumar Bawri and the State Bank of India for construction of a building which were annexed to the affidavit of the respondents. As regards the claim of the petitioners regarding the income-tax return showing the income of Bawri Mansion, the respondents stated that those assessments were made as a protective measure. The respondents also stated that a huge tax demand was outstanding against Sri Binod Kumar Bawri since long. According to the respondents, the authorised representative of Sri B. K. Bawri verbally agreed to convince Sri B. K. Bawri to make payment of three to four lakhs as part-payment against his outstanding dues. Since Sri B. K. Bawri thereby agreed to pay so and accordingly he paid Rs. 1,00,000 on 23rd Aug., 1994. Thereafter, the authorised representative of the assessee, Sri Binod Kumar Bawri, appeared and took two challans of Rs. one lakh each on 19th Sept., 1994, but no payment was so far made. The respondents also denied about the existence of any written agreement made by the assessee, Sri Binod Kumar Bawri, for payment of Rs. 1,00,000 per month mentioned in the writ petition. All along the rents received from the Bawri Mansion were assessed in the hands of Sri Binod Kumar Bawri and the assessment was confirmed in appeal by the CIT in the case vide order dt. 20th Oct., 1989, in Appeal No. 20-Shill of 1988-89 for the asst. yr. 198586. For the subsequent period also, the matter was treated as such, the respondents contended that petitioner No. 1, Sri Jagannath Bawri, who claimed to be the guarantor of the loan taken for the purpose of construction of a building by the loanee cannot become an owner of the building.

The respondents in their affidavit stated that sufficient care was taken before issuance of the notice. In support of the assertion, the respondents referred to the information collected by them from the Shillong municipality, the Revenue Department, namely, the Additional Dy. CIT, Revenue, the Executive Engineer, Electricity Board and the letter confirming over land by Sri Binod Kumar Bawri. (sic) Ms. Millie Hazarika, learned counsel appearing on behalf of the petitioners, strenuously submitted that since the petitioners are the lawful owners of the property in question, respondent No. 2 was not competent to issue notice in purported exercise of power under s. 226(3) of the Act. Ms. Hazarika learned counsel also pointed out that the petitioners were assessed in respect of their income from the same property and the same income cannot be taxed in two hands. Ms. Hazarika further submitted that the impugned proceeding was unjust, unfair and arbitrary so much so that before issuance of the impugned notice the owners of the property, i.e., the petitioners were not taken into confidence.

Mr. G. K. Joshi, learned standing counsel for the Revenue, appearing on behalf of the respondents, submitted that the issue raised in this petition involves complicated questions of fact which are not to be gone into in a proceeding under Art. 226 of the Constitution. On the own showing of the petitioners the right to the property in question is yet to be established by the petitioners and for which the petitioners approached the civil Court, pointed out Mr. Joshi, learned counsel for the respondents. The respondents lawfully proceeded with the matter and initiated the recovery proceeding. The assessee, Sri B. K. Bawri, was given ample opportunity for payment of his tax dues on the basis of assessments, therefore, the question of violation of natural justice did not arise. The petitioners were not the assessees against whom the proceeding is initiated ; therefore, the question of giving any notice to the petitioners does not arise. Mr. Joshi, learned counsel, pointed out to the communication sent by the Asstt. CIT (Investigation Circle), Shillong, to Sri Binod Kumar Bawri, asking him time and again to appear either in person or by a representative for the hearing of the case. Sec. 226 of the Act is part of the machinery for collection and recovery of tax as contained in Chapter XVII of the Act. Sec. 220 of the Act indicates when tax is payable and when assessee deemed in default. Penalty payable when tax in default, certificate to TRO, TRO by whom recovery is to be effected, validity of certificate and cancellation or amendment thereof are all embodied in the said Chapter. Sec. 226 envisions the other modes of recovery. Under s. 226(3)(i) the concerned officer may at any time or may from time to time, by notice in writing, require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee, to pay to the officer either forthwith upon the money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to o han that amount. The mechanism set out in s. 226(3) for recovery of arrears of tax vested in the authority is of distinct character. It is a jurisdiction which reaches out beyond the area normally enjoined by the officer in the matter of recovery of the arrear of tax. The jurisdiction is extended to a person who is not an assessee. The statute has chosen him because money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee. The jurisdiction is not limited to issue notice on such person under sub-s. (3) of s. 226 to pay the sum due as arrears to the AO or the TRO ; the officer is further empowered to regard such person as an assessee in default in respect of the amount specified in the notice and to take steps for realisation of the amount as if it were an arrear of tax due from him. The power conferred on the authority under the provision of the Act is a significant power charged with serious ramifications. It is to be exercised with the utmost care and circumspection before issuing the notice under sub-s. (3)(i) of the Act. The AO is to satisfy himself prima facie, of course that the person against whom the notice is issued is the person who fits in with the category portrayed in the section. He is not to exercise these powers hastily, indiscriminately and capriciously. The officer concerned must have in his possession, some materials to entertain the belief albeit prima facie that the person or the institution to whom he issued the notice is one from whom money is due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee. In the instant case, the Department reached a conclusion of fact that Sri Binod Kumar Bawri is the owner of the property. That conclusion cannot be said to be arbitrary, perverse or unreasonable. The authority made an in-depth inquiry and, thereafter, attained its satisfaction and took steps as per law. The Department made available all materials on which it relied before the Court which cannot be discarded as irrelevant or absurd. The assessee is not before the Court. The petitioners have relied on title in the absence of the assessee who was treated as owner by the Revenue. The petitioners on their own admitted about the institution of a suit against Sri Binod Kumar Bawri claiming right, title and interest over the property. The writ Court is not a forum for declaration of right, title and interest over the property. The writ Court also cannot go over the sufficiency or adequacy of the materials on which the conclusion is based.

8. As regards the contention of Ms. Hazarika, learned counsel for the petitioners about income-tax returns, on perusal of annexure-A series it can only be said that those documents are only intimation which is sent to the assessee specifying the sum so payable under s. 143(1)(a). At any rate, the assessments made are only protective assessments. Under the law it is open to the Department to make assessments on two persons in respect of the same income, where there is some ambiguity as to the liability to charge. Such assessments are made to protect the interest of the Revenue so much so, unless such protective or alternate assessment is made, assessment proceedings against the party finally found to be liable may become barred by time. It has now become an established practice that in the case of doubt as to the person who will be and deemed to be in receipt of the income, it is open to the Department to make protective or alternative assessment. In Lalji Haridas vs. ITO (1961) 43 ITR 387 (SC), the Supreme Court observed as follows : “In cases where it appears to the IT authorities that certain income has been received during the relevant assessment year but it is not clear who has received that income and prima facie it appears that the income may have been received either by A or by B or by both together, it would be open to the relevant IT authorities to determine the said question by taking appropriate proceedings both against A and B.”

9. It may, however, be added that while a protective assessment is permissible, a protective recovery is not. In what circumstances and to what extent a writ Court can review the merits of the decision is no longer indeterminate. “Judicial review is concerned, not with the decision, but with the decision-making process, unless that restriction on the power of the Court is observed, the Court will . . . under the guise of preventing the abuse of power, be itself guilty of usurping power . . . Judicial review as the words imply, is not an appeal from a decision, but a review of the manner in which the decision was made . . .” [Rehearsed from the statement of Lord Brightman in Chief Constable of the North Wales Police vs. Evans (1982) 3 All ER 141 (HL), 154.] Recounting the trend set out in this direction by the Court, de Smith, Woolf and Jowell in Judicial Review of Administrative Action (5th Edn. 6-007 p. 297) animadverted, “The Courts have repeatedly affirmed their incapacity to substitute their own discretion for that of an authority in which the discretion has been confided, and there are many matters which the Courts are indisposed to question. Though they are the ultimate judges of what is lawful and what is unlawful there are certain questions which the Courts are ill-equipped to decide . . .” The decision-making process of respondent No. 2 in calling upon respondent No. 3 vide the impugned notice dt. 19th Sept., 1994 (Annexure-C), to deposit the rent paid by him in respect of the premises in question to his account cannot be faulted as arbitrary improper, and perverse. The respondents while invoking jurisdiction under Chapter XVII of the Act took into consideration all the relevant considerations, overlooking irrelevant or extraneous considerations. Similarly, the impugned decision cannot be labelled as manifestly unreasonable that no reasonable authority properly instructed in law entrusted with the power in question could reasonably have arrived at such a decision.

For the reasons stated above, the writ petition deserves to be dismissed and, thus, is dismissed with costs which I quantify at Rs. 5,000 (five thousand only). Interim order, if any, stands vacated.

[Citation : 234 ITR 464]