Dear Radhika
The relevant sub-section (3) of Section 226 of Income Tax Act, 1961
(3) (
i) The
30[Assessing] Officer
31[or Tax Recovery Officer] may, at any time or from time to time, by notice in writing require any person from whom money is due or may become due
32 to the assessee or any person who holds or may subsequently hold money
33 for or on account of the assessee to pay to the
34[Assessing] Officer
35[or Tax Recovery 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 or less than that amount.
(ii) A notice under this sub-section may be issued to any person who holds or may subsequently hold any money for or on account of the assessee jointly with any other person and for the purposes of this sub-section, the shares of the joint holders in such account shall be presumed, until the contrary is proved, to be equal.
(
iii) A copy of the notice shall be forwarded to the assessee at his last address known to the
34[Assessing] Officer
35[or Tax Recovery Officer], and in the case of a joint account to all the joint holders at their last addresses known to the
34[Assessing] Officer
35[or Tax Recovery Officer].
(iv) Save as otherwise provided in this sub-section, every person to whom a notice is issued under this sub-section shall be bound to comply with such notice, and, in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary for any pass book, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary.
(v) Any claim respecting any property in relation to which a notice under this sub-section has been issued arising after the date of the notice shall be void as against any demand contained in the notice.
(
vi) Where a person to whom a notice under this sub-section is sent objects to it by a statement on oath that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee, then nothing contained in this sub-section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the
36[Assessing] Officer
37[or Tax Recovery Officer] to the extent of his own liability to the assessee on the date of the notice, or to the extent of the assessees liability for any sum due under this Act, whichever is less.
(
vii) The
36[Assessing] Officer
37[or Tax Recovery Officer] may, at any time or from time to time, amend or revoke any notice issued under this sub-section or extend the time for making any payment in pursuance of such notice.
(
viii) The
36[Assessing] Officer
37[or Tax Recovery Officer] shall grant a receipt for any amount paid in compliance with a notice issued under this sub-section, and the person so paying shall be fully discharged from his liability to the assessee to the extent of the amount so paid.
(
ix) Any person discharging any liability to the assessee after receipt of a notice under this sub-section shall be personally liable to the
36[Assessing] Officer
37[or Tax Recovery Officer] to the extent of his own liability to the assessee so discharged or to the extent of the assessees liability for any sum due under this Act, whichever is less.
(
x) If the person to whom a notice under this sub-section is sent fails to make payment in pursuance thereof to the
36[Assessing] Officer
37[or Tax Recovery Officer], he shall be deemed to be an assessee in default in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were an arrear of tax due from him, in the manner provided in
sections 222 to
225 and the notice shall have the same effect as an attachment of a debt by the Tax Recovery Officer in exercise of his powers under
section 222.
