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The points raised are, in my opinion, of some importance and are also bare of authority. The writ petition has been pending for more than two years. It is, therefore, desirable that this writ petition be decided by a larger Bench at the outset. Attempt should be made to secure the orders of my Lord the Chief Justice with due promptitude so that the petition may be disposed of within one month from today.

[The case was heard by a Division Bench composed of INDER DEV DUA and N. S. NARULA JJ. and the judgment of the court was delivered on 25th February, 1966, by N. S. NARULA J.] ORDER OF THE DIVISION BENCH N. S. Narula J., - The main question involved in this petition under article 226 of the Constitution filed by the Sahukara Bank Ltd., Ludhiana, hereinafter referred to as the bank, is about the effect of mere denial of liability by a garnishee to whom a notice under section 46(A) of the Indian Income-tax Act (11 of 1922), hereinafter called the 1922 Act, has been issued by an Income-tax Officer and about the scope of that section.

The argument is that, once any of the above-said two objections is raised by a garnishee, the 1922 Act does not permit the income-tax authorities to look further towards the garnishee at all howsoever false or mala fide may be the plea of the objector on merits. Section 46(5A) of the 1922 Act reads as follows :

"46(5A) The Income-tax Officer may at any time or from time to time, by notice in writing (a copy of which shall be forwarded to the assessee at his last address known to the Income-tax Officer) require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee to pay to the Income-tax 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 taxpayer in respect of arrears of income-tax and penalty or the whole of the money when it is equal to or less than that amount.
Where a person to whom a notice under this sub-section is sent objects to it on the ground 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 section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, to the Income-tax Officer."

In support of this contention of the bank its learned counsel has cited before us the judgment of a learned single judge of the Andhra Pradesh High Court (Bhimasankaram J.) in P. Rajeswaramma v. Income-tax Officer, Nellore. In that case a notice was issued under section 46(5A) of the Act to P. Rajeswaramma. Soon after receiving the notice, a written objection against it was filed on the ground that no sum was due from the objector to the assessee and that no amount was held by the alleged garnishee on account of the assessee. This factual position was contested by the department. The objector came up to the Andhra Pradesh High Court and it was held by the learned single judge of that court that, even on the assumption that the objections of the garnishee had not been established, the threat of the Income-tax Officer to proceed against the garnishee in the face of the above objections was contrary to law. Taking into consideration the objects of the introduction of sub-section (5A) in section 46 of the 1922 Act as described in the report of the Income-tax and Business Profits Tax (Amendment) Act, 1948, was passed, the learned judge held that sub-section (5A) of section 46 is intended to apply only to an admitted liability. The ratio of the judgment is contained in the following passage :

I am also in substantial agreement with the view expressed by the learned judge of the Andhra Pradesh High Court in P. Rajeswarammas case, though I may not be prepared to go to the extent to which that judgment is capable of being understood. It appears to be correct that the phraseology of sub-section (5A) of section 46 of the 1922 Act does not appear to arm the income-tax authorities with jurisdiction to decide factually disputed questions of liability of the garnishee to the original assessee. That does not, however, mean that the provision exonerates a garnishee of his liability to the income-tax authorities by merely denying his liability to the assessee though expressly admitting that he holds the requisite amount of the assessee in his hands which he does not owe to any other person and in which the garnishee claims no personal interest. In any case, it is no defence whatever to the notice under section 46(5A) of the old Act to say that the assessees amount is held by the garnishee but, by a transfer entry, the garnishee has taken the amount out of its books at the station at which the attachment is sought to be effected, to its books, at the same station, relating to a branch outside the country. That precisely is the sum total of the objection of the bank in this case. The bank admits that a sum of Rs. 10,266-7-6 belonging to the original assessee was in deposit with the bank and is held to the credit of the assessee. The stand taken by it is that after a certain date, in December, 1949, the amount has been transferred to the Pakistan branch of the bank. It may also be remembered that the amount was not in fact physically sent anywhere from Ludhiana but it was only by book entry that the alleged transfer was effected. Even that book entry is within the head office books at Ludhiana. It is admitted that no branch of the bank has ever functioned in Pakistan after the 14th of August, 1947. Nor does the bank have any control over anything that might have been salvaged from its Pakistan branches after the August 1947 riots. There is, therefore, no disputed question of fact which the income-tax authorities had to investigate or to decide in order to fix the liability of the bank or to exonerate it of its liability under sub-section (5A) of section 46. Under legal terminology, the only objection of the bank was that the situs of the debt due by it to the assessee had shifted from Ludhiana to Pakistan. According to the law laid down by their Lordships of the Supreme Court in Delhi Cloth and General Mills Co. Ltd. v. Harnam Singh, the obligation of a bank to pay its customers rests primarily on the branch at which he keeps his account and a customer must make a demand for payment at the branch where his current account is kept before he can have any cause of action against the bank. A debt has been held by the Supreme Court in Harnam Singhs case to be property in form of a chose-in-action. Their Lordships have held that a debt being intangible cannot have location except notionally and, in order to give it notional position, rules have to be framed along arbitrary lines. Applying the tests laid down by the Supreme Court, it appears to be clear in this case that the intention of the original assessee was that the amount deposited by him at Ludhiana would be repayable to him by the bank at Ludhiana. Admittedly, no instructions have been given by the original assessee to the bank to transfer the amount to any other place. The situs of the debt in dispute in the instant case is, therefore, in the circumstances referred to above, Ludhiana, and no other place. In this conclusion I am also supported by a Division Bench judgment of this court (G. D. Khosla C.J. and Mahajan J.) in Okara Grain Buyers Syndicate Ltd. v. United Commercial Bank Ltd., wherein it was held that, when a bank closes its branch, the assets and liabilities of that branch go over to the head office and the persons who have claims over the branch have to lodge those claims with the head office. The learned judges further held that in the case of a bank deposit, whether current or otherwise, the demand for its return has to be made at the branch where the deposit was made and, if such branch is no longer functioning, then the demand has to be made at the head office of the bank. The original assessee had made the deposit at Ludhiana. The head office of the bank is also at Ludhiana. In any case, the Pakistan branches of the bank have ceased to function. It is therefore, wholly futile for the bank to contend that, merely by making a book entry, the amount had ceased to be due to the original assessee at Ludhiana but has started being due to him at Lyallpur in Pakistan. The bank has never taken up the position in its written objections at any stage that the sum demanded from it is not due to the assessee but to some one else. Nor has the bank denied that it does not hold the amount in question for or on account of the assessee. The only thing that it emphasised all along in writing is that the amount stands transferred to the account of Pakistan branches of the bank. To bring out to the surface this definite stand of the bank, I have underlined the relevant words in the various communications addressed by the bank from time to time, while reproducing them in this judgment. The bank has all along admitted the relevant facts and has only questioned the book entries and not the factum of the amount being available with it. In one way the banks case appears to fall squarely within the ratio of the judgment of the Andhra Pradesh High Court in Rajeswarammas case. The bank has, by word as well as by conduct, admitted that a sum of Rs. 10,264-7-6 (the last balance on January 1, 1948, minus the incidental charges debited to the account in May, 1948) is due by it to the assessee, as it is said to be held by the bank in its books of account at Ludhiana relating to its Pakistan branches (though not held in its books relating to the Indian branches). The bank has, therefore, become liable to the Income-tax Officer for the amount in question. In this view of matter, it does not appear to be necessary to decide the larger question involved in the main contention of Mr. Aggarwala. But even if it becomes necessary to do so, I would hold that if a garnishee takes up a wholly mala fide stand regarding its liability by admitting that the amount in question is held by it and does not claim any personal interest in the amount or the interest of any other person but merely states that he denies liability because of the entries relating to the amount having been transferred from one book to another, it would be open to the income-tax authorities to attach the amount. The income-tax authorities are not authorised by section 46(5A) to decide any bona fide dispute about the factum of the amount being available with the garnishee or not. Nor would the Income-tax Officer have jurisdiction to decide the liability of the garnishee to the assessee in case the liability itself is factually in dispute. But the denial, in order to prevail against the income-tax authorities, must be factual, unambiguous and bona fide.