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The principal question that arises for determination in this appeal is as to whether, on a true interpretation of section 226 (3) (vi), the Income-tax Officer was bound to hold an inquiry before he came to the conclusion that the statement contained in the affidavit filed on behalf of the petitioners was false in any material particular. Section 226 (3) deals with recovery of arrears of tax from an assessee by requiring "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" (hereinafter referred to as the garnishee) to pay to the Income-tax Officer "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." There are ten clauses in which section 226 (3) is divided and these clauses, in so far as material provide inter alia as follows:

It was in exercise of the power conferred under clause (i) that the notice dated 21st May 1966 was issued by the Income-tax Officer to the petitioners. This notice did not mention or even indicate any specific amount alleged to be due from the petitioners to B.R. Sons Limited and it was therefore observed by the High Court that the notice was not in accordance with the provisions of clause (i). We are not sure whether, on a true interpretation of clause (i) in the light of the other clauses of section 226 sub-section (3), it is necessary that the notice under clause (i) should set out a specific amount as due from the garnishee to the assessee or it is enough if the notice merely reproduces the language of clause (i) and requires the garnishee to pay "at or within the time specified in the notice" so much of the money as is sufficient to pay the amount due from the assessee in respect of arrears of tax. It is a debatable question on which we do not wish to express any opinion, since the High Court has taken the view that even though the notice dated 21st May 1966 issued to the petitioners did not mention or give indication of any specific amount alleged to be due from the petitioners to B.R. Sons Limited, it was not invalid, since no prejudice was caused to the petitioners by reason of non-specification of such amount and this view taken by the High Court was plainly correct, because the petitioners at no time complained that the notice did not specify the amount alleged to be due from the petitioners to B.R. Sons Limited or that it was vague and indefinite and in fact replied to the notice on merits by raising an objection that, according to the statement of account between the petitioners and B.R. Sons Limited, there was no credit balance in favour of B.R. Sons Limited and on the contrary B.R. Sons Limited owed a large amount to the petitioners and also filed an affidavit sworn by their accountant Shiv Kumar Arora stating that on 24th May 1966 when they received the notice dated 21st May 1966 there was nothing due from the petitioners to B.R. Sons Ltd. but on the contrary B.R. Sons Limited owed a sum of Rs. 76,436.23 to the petitioners. The view taken by the High Court could also be sustained additionally on the ground that, in any event, by his letter dated 31st December, 1966 the Income- tax Officer pointed out to the petitioners that, according to him, B.R Sons Limited had a credit balance of over Rs. 8 lacs as on 24th May 1966 and the petitioners had therefore clear notice of what was the amount alleged to be due from the petitioners to B.R. Sons Limited. So far as the affidavit of the accountant filed on behalf of the petitioners was concerned, it was disputed before us on behalf of the Revenue whether this affidavit could be regarded as a "statement on oath" within the meaning of clause (vi) so as to attract applicability of that clause. The argument of the Revenue was and this argument was accepted by the High Court, that though this affidavit was undoubtedly made on oath, it was not a "statement on oath"

Now under clause (vi), where a garnishee to whom a notice under clause (i) 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, he is not required to pay such sum or any part thereof to the Income-tax Officer in compliance with the requisition contained in the notice. But if it is discovered by the Income-tax Officer that such statement on oath was false in any material particular, the garnishee is made personally liable to the Income-tax Officer to the extent of his own liability to the assessee on the date of the notice or to the extent of the assessee's liability for arrears of tax, whichever is less. The petitioners having objected to the requisition contained in the notice dated 21st May 1966 by filing an affidavit of their accountant that nothing was due from the petitioners to B.R. Sons Limited, were not bound to comply with the requisition contained in such notice, but if the Income-tax Officer discovered that such statement on oath was false in material particular and that some amount was due from the petitioners to B.R. Sons Ltd. the petitioners would be personally liable to pay such amount to the Income-tax Officer. The question is whether the Income-tax Officer could be said to have discovered that the statement on oath made in the affidavit of the accountant of the petitioners that nothing was due from the petitioners to B.R. Sons Limited was false in any material particular, as claimed by the Revenue in the notices dated 31st December 1966 and 11th January 1967. Now it is obvious that under clause (vi) the discovery by the Income-tax Officer that the statement on oath made on behalf of the garnishee is false in any material particular has the consequence of imposing personal liability for payment on the garnishee and it must therefore be a quasi-judicial decision preceded by a quasi-judicial inquiry involving observance of the principles of natural justice. The Income-tax Officer cannot subjectively reach the conclusion that in his opinion the statement on oath made on behalf of the garnishee is false in any material particular. He would have to give notice and hold an inquiry for the purpose of determining whether the statement on oath made on behalf of the garnishee is false and in which material particular and what amount is in fact due from the garnishee to the assessee and in this inquiry he would have to follow the principles of natural justice and reach an objective decision. Once a statement on oath is made on behalf of the garnishee that the sum demanded or any part thereof is not due from the garnishee to the assessee, the burden of showing that the statement on oath is false in any material particular would be on the Revenue and the Revenue would be bound to disclose to the garnishee all such evidence or material on which it proposes to rely and it would have to be shown by the Revenue on the basis of relevant evidence or material that the statement on oath is false in any material particular and that a certain definite amount is due from the garnishee to the assessee. Then only can personal liability for payment be imposed on the garnishee under clause (vi).