Law:

Section:

Section 226 of the Income-tax Act, 1961 - Collection and recovery of tax - Other modes of recovery - Petitioner assessee instituted suit for specific performance of sale of a house against 2nd respondent - Petitioner had paid advance sum on execution of sale agreement and further deposited balance sum in Court during pendency of said suit - High Court finally decreed suit - Sale deed was executed but could not be registered in petitioner's favour for want of income-tax clearance certificate from 2nd respondent - Since petitioner was in arrears of income-tax, Income-tax Officer acting under section 226 attached house sold to petitioner and sought payment of sum deposited in Court by petitioner - Trial Court allowed ITO's prayer on ground that sale deed having not been registered, amount in deposit continued to belong to petitioner - Whether once amount was deposited in Court same should be deemed to have been earmarked for payment of balance consideration to 2nd respondent, and, consequently, it ceased to be property of petitioner - Held, yes - Whether department could not have better right than that of petitioners and therefore, said amount could not be attached - Held, yes Words and phrases: Words 'belonging to' as occurring in section 226 of the Income-tax Act, 1961. FACTS In respect of an agreement of sale of a house executed in favour of petitioner-assessee by 2nd respondent, the assessee paid certain amount as advance. However, the 2nd respondent sold the house to the respondent Nos. 3 to 8 on which the assessee file a suit for specific performance of the agreement. During pendency of said suit, the assessee deposited into the Court the balance of the consideration money agreed upon under the agreement. The Trial Court awarded only damages and declined to grant specific performance. On appeal, the specific performance was decreed by the High Court. The sale deed was thereupon executed but could not be registered for want of income-tax clearance certificate from the vendor. Since the assessee was in arrears of income-tax, the ITO acting under section 226 got the house sold to the petitioner attached and prayed for payment to him of the amount in deposited…

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