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2020 (4) TMI 455 - HC - Income TaxJoint and several liability of partners for tax payable by firm - recovery of outstanding demand from the petitioner in the capacity of a partner for the assessment years 2011-12 and 2012-13 that is upto 31.03.2012 to the extent of ₹ 38,40,780.00 plus interest under Section 220(2) - HELD THAT - When learned counsel for the petitioner pointed out the anomaly, Mr. Walve, learned standing counsel submitted on the basis of the instructions received from respondent No.1 who is present in the Court that there is no demand payable by the firm for the assessment years 2011-12 and 2012-13 and consequently, question of raising of any demand against the petitioner does not arise. Further, petitioner having retired as partner of the firm with effect from 31.03.2012 raising any demand against the petitioner for assessment year 2013-14 and onwards also does not arise.
Issues:
Assessment of tax arrears under Section 188A of the Income Tax Act, 1961 against a retired partner of a firm. Analysis: The petitioner, an individual assessed under the Income Tax Act, retired from a partnership firm on 31.03.2012. The Income Tax Officer issued a notice under Section 188-A to recover tax arrears from the petitioner as a partner of the firm for the assessment years 2011-12 and 2012-13. The petitioner responded, stating that there were no pending demands against the firm for those years as the appeals filed by the firm had been allowed by the Commissioner of Income Tax (Appeals). Despite this, the Income Tax Officer held the petitioner jointly and severally liable with the firm for the tax arrears. The order also included a demand for the subsequent assessment year 2013-14, even though the petitioner had retired from the firm by then. Upon the petitioner's challenge, the High Court noted that there was no demand payable by the firm for the assessment years 2011-12 and 2012-13. The court also acknowledged that since the petitioner had retired as a partner from the firm on 31.03.2012, raising any demand against the petitioner for the assessment year 2013-14 and onwards was unwarranted. In light of these facts, the High Court set aside the order issued by the Income Tax Officer, thereby allowing the writ petition filed by the petitioner. The court made this decision without imposing any costs on the parties involved.
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