Law: Income Tax Act, 1961

Section: 220(2),226(3)

Income Tax----Recovery of tax---A mortgaging property to petitioner---Petitioner constructing sh6s on property and letting it out to a company---Tax Recovery Officer issuing notice to company for recovery of arrears of tax due from a firm in which mortgagor was a partner, and asking company to pay rent, due to petitioner from company, to Tax Recovery Officer---Partner of firm had no right or, title to property---Petitioner did not owe any money to firm or to any of its partners---Company not being tenant of firm or any of its partners not required to pay rent to them---Neither petitioner nor company was holding rent on behalf of firm or its partners---Recovery proceedings invalid---Amount recovered by Tax Recovery Officer from company to be refunded to petitioner---Indian Income Tax Act, 1961. Ss. 220(2) & 226(3). A (mortgagor) mortgaged his property with possession with all rights attached to it, in favour. of the petitioner (mortgagee) by way of a registered mortgage deed. Under the mortgage deed, the mortgagee was given the right to make construction on the plot of land. The petitioner constructed two shops and both the shops were let out to respondent No.2, a company. The Tax Recovery Officer (respondent No.l) issued a notice under section 226(3) of the Income Tax Act, 1961, to respondent No.2, the company, for recovery of a sum of Rs.1,10,043 plus interest under section 220(2) due from K, a partner of a firm, in which A was also a partner, on account of arrears of income-tax and the notice stated that respondent No.2 should pay to the Tax Recovery Officer any sum due from it or held by it, for and on account of K. The petitioner coming to know of the fact that her rent had been attached for recovery of arrears of tax from K, wrote to the Tax Recovery Officer bringing to his notice that the property was duly mortgaged by A to the petitioner through a registered mortgage deed and that K, the partner of the firm, had no right or title to the property, from Which the Tax Recovery Officer was recovering income-tax. The petitioner requested the Tax Recovery Officer that the tax recovered from respondent No.2 (the tenant of the petitioner) be refunded to the…

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