1962 (2) TMI 118 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the notice issued under section 29 of the Indian Income-tax Act.
2. Timeliness of the notice issued four years after the assessment order.
3. Proper form of the notice of demand.
4. Joint and several liability of partners and the issuance of separate notices.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 29:
The petitioner contended that the notice issued under section 29 was not based on any order passed by the Income-tax Officer, rendering it invalid. However, the court held that the petitioner's liability arose as a consequence of section 44 of the Act, which states that partners are jointly and severally liable for the tax assessed on the firm before its discontinuance. The court clarified that there need not be a separate assessment against the partners, as their liability is vicarious. The notice of demand was based on the order of assessment made against the firm, and section 29 requires that a notice be served upon the assessee or other person liable to pay such tax, penalty, or interest. The court concluded that the petitioner, being a partner at the time of the firm's discontinuance, was liable under section 44 and thus the notice was valid.

2. Timeliness of the Notice Issued Four Years After the Assessment Order:
The petitioner argued that the notice of demand issued four years after the assessment was invalid due to unreasonable delay. The court noted that section 29 does not prescribe any period of limitation for issuing a notice. The court referred to previous judgments, including In the matter of Narayan Bhanja Deo and Firm Khemchand Ramdas v. Commissioner of Income-tax, which suggested that notices should be issued within a reasonable time. However, the court emphasized that unless a period of limitation is explicitly prescribed by the statute, courts should not impose their own limitations. The court found that the notice issued soon after the decision in Govindaswamy's case was within a reasonable time.

3. Proper Form of the Notice of Demand:
The petitioner contended that the notice of demand was not in the proper form as it did not mention the status of the assessee. The court found this contention to be highly technical and devoid of merit. The usual printed form was used for the notice, and the covering letter clarified the position. The court held that the notice was issued to the partners because they were liable to pay the tax due from the firm, and there was no infirmity in the notice of demand.

4. Joint and Several Liability of Partners and Issuance of Separate Notices:
The petitioner argued that a joint notice should have been served on all the partners, rather than separate notices on individual partners. The court explained that under section 44, the liability of the partners is joint and several, meaning the tax can be collected from the joint assets or from the partners individually. The court held that if the Income-tax Officer chose to proceed against the partners severally, the partners could not raise a valid objection.

Conclusion:
The court rejected all the contentions raised by the petitioner. It held that the notice of demand served on the petitioner was valid, timely, in the proper form, and that the issuance of separate notices to individual partners was appropriate. The petition was dismissed with no costs awarded.