SURINDER NATH KAPOOR vs UNION OF INDIA & ORS.

The Supreme Court held that a garnishee order under Section 226(3)(x) of the Income Tax Act, 1961, requires proper notice and cannot be based on a fictitious sum. The Court set aside the sale of property conducted pursuant to such an order, emphasizing that the firm M/s. Krishna Kapoor & Co. was deemed an assessee in default only for the specified amount of Rs. 2,86,450. The Court ruled that the auction sale could not stand due to the lack of proper procedure, thereby affirming the need for adherence to statutory requirements in tax recovery proceedings.