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Section 226(3) of the Income-tax Act, 1961 - Collection and recovery of tax - Other modes of - Whether an order of attachment under section 226(3) comes to an end where assessment, which gave rise to order of attachment, is set aside in appeal with a direction to make assessment afresh - Held, yes FACTS The petitioner did not comply with the order under section 226(3) on the ground that the assessment which gave rise to the order of attachment under section 226(3) had been set aside in appeal with a direction to make the assessment afresh. On writ: HELD The order of attachment issued under sub-section (3) of section 226 is only a mode of recovering the tax which has become due. The tax is due under and by virtue of an order of assessment. Once the order of assessment is set aside in appeal, the demand falls to ground. In such a situation, the order of attachment issued under section 226(3) cannot survive; it has no independent existence. Unless there is a provision in the Act or the Rules, which keeps the order of attachment alive and subsisting notwithstanding the setting aside of the assessment order, it cannot survive. The mere fact that while setting aside the assessment orders, a direction to make a fresh assessment was given, does not keep alive the attachment order. Therefore, the order under section 226(3) was quashed. CASE REFERRED TO ITO v. Seghu Buchiah Setty [1964] 52 ITR 538 (SC). R.V. Gupta, V.B. Upadhyaya and Shashi Kant for the Petitioner. JUDGMENT Reddy, CJ. - This is writ petition for issuance of a writ of certiorari to quash the order dated 15-2-1989 (Annexure 17 to the writ petition) issued by the ITO, Ward III (2), Banda. Under the impugned order, the petitioner has been called upon to remit the amount held by him for and on behalf of the defaulter, which was attached by the ITO earlier under section 226(3) of the Income-tax Act, 1961 ('the Act')- The notice puts the petitioner on notice that he has made payment to the defaulter even after receiving the attachment order, which is illegal. Indeed, the impugned notice was issued in response to a representation made by the petitioner on 13-2-1989. 2. One Gopal Das Gupta is the defaulter. For…

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