Law:

Section:

Section 222, read with Rules 2 and 16(1) of Schedule II the of Income-tax Act, 1961 - Collection and recovery of tax - Certificate proceedings - Whether, when before execution can be taken out pursuant to decree against petitioner, he receives notice under rule 2 of Schedule II claiming amount on account of arrears of income-tax, he becomes incompetent to deal with any of his property by virtue of operation of sub-rule (1) of rule 16 and this would disentitle any civil court from issuing process against property which defaulter becomes incompetent to deal with and, actual attachment of property under rule 3 or otherwise is not necessary to attract application of bar provided in sub-rule (1) of rule 16 - Held, yes FACTS The respondent obtained a decree against the petitioner. Before the execution could be taken out, the petitioner had received a notice from the income-tax authorities under rule 2 of the Second Schedule followed by another claiming a total sum of about Rs. 4,000 from the defaulter on account of arrears of income-tax. The petitioner filed objections to the execution proceedings on the ground that, by virtue of the aforesaid notice, no process could be issued by the executing court pursuant to the decree against any property of the petitioner by virtue of the bar created for the issue of such a process by rule 16(1) of the Second Schedule. The executing court over ruled the objection on the ground that the income-tax authorities had not effected any attachment of any property of the petitioner in pursuance of the notice of demand and the bar of rule 16(1) would not, therefore, be attracted. On writ : HELD On plain meaning, the rule provides for three things. In the first instance, it disentitles the defaulter, on whom a notice under rule 2 had been served, "to mortgage, charge, lease or otherwise deal with any property belonging to him except with the permission of the Tax Recovery Officer". In the second instance it debars the civil court from issuing any process in execution of a decree against property which the defaulter becomes disentitled to deal with. In the third instance, it provides that where an attachment has been made under the…

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