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TMI Blog1967 (4) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... yle of Messrs. Jawahar Tent Factory, Agra, in partnership. There were four partners in the firm--Jawahar Lal Shiam Lal, Radha Raman and Radha Krishan. Jawahar Lal represented his Hindu undivided family and his share in the profit and loss was eight annas in a rupee. The share of other partners was two annas eight pies each. The firm was registered under section 26A of the Indian Income-tax Act, 1922, and tax was assessed on the income of the firm in accordance with section 23(5)(a) of the Act. The partnership was, according to the Income-tax Officer, dissolved on October 23, 1946. This appeal relates to the tax liability of Jawahar Lal in respect of the income from the firm for the assessment years 1944-45, 1945-46, 1946-47 and 1947-48. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tributable to his share in the income was computed. The Income-tax Officer served Radha Krishan, respondent in this appeal, on October 3, 1962, with demand notices for the tax remaining unpaid by Jawahar Lal. Radha Krishan thereupon moved the High Court of Judicature at Allahabad for a writ of certiorari quashing the notices of demand and for an order directing the Income-tax Officer to withdraw the notices. Manchanda J. allowed the petition filed by Radha Krishan and the order passed by Manchanda J. was confirmed in appeal by a Division Bench of the High Court. With special leave, the Income-tax Officer, Agra, has appealed to this court. Section 23(5) of the Income-tax Act, as it stood at the material time, read as follows : "(5) N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and is added to his other income and the total income so computed is brought to tax. If the firm is unregistered, the tax payable by the firm is, except when the Income-tax Officer otherwise directs in the interests of revenue, determined as in the case of any other entity, and demand for tax is made on the firm itself. The result is that, if the firm is registered, tax is collected from the partners individually and there is no levy of tax against the firm. If the firm is unregistered, the tax may, unless otherwise directed, be levied against the firm. In either case, the machinery set up by section 23(5) is for assessment of tax payable on the income of the firm. The income of the firm is computed, but tax is assessed on that income on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons is dissolved, every person who was at the time of such discontinuance or dissolution a partner of such firm or a member of such association shall, in respect of the income, profits and gains of the firm or association, be jointly and severally liable to assessment under Chapter IV and for the amount of tax payable and all the provisions of Chapter IV shall, so far as may be, apply to any such assessment." Section 44 is enacted with a view to prevent evasion of tax by discontinuance of the business of a firm or dissolution of an association of persons. On discontinuance of the business of a firm or dissolution of the association of persons, it is declared that every person who was, at the time of such discontinuance or dissolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he principle of joint and several liability under section 44 has no application. Counsel for the Commissioner said that this court had, if not expressly, tacitly, accepted the view that the liability of the partners of a firm to pay tax attributable to the share of each partner in the income of the firm is joint and several. Counsel relied upon the clause " determining the tax payable by registered and unregistered firms respectively " in the judgment of this court in Commissioner of Income-tax v. Amritial Bhogilal & Company at page 136 : " It is true that the Income-tax Officer is empowered to follow the two methods specified in section 23(5)(a) and (b) in determining the tax payable by registered and unregistered firms res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed and the sum payable by him on the basis of such assessment was to be determined. But this was merely a method of collection of tax due from the firm. " In S. V. Angidi Chettiar's case it was held that the Income-tax Officer has power to make an order under section 28 imposing penalty on a firm even after dissolution of the firm. There is nothing in the observations relied upon which indicates that under section 23(5)(a) when the income of a registered firm is computed, and the tax liability is imposed by the machinery provided thereunder, the tax is imposed upon the firm or is recoverable jointly and severally from the partners of the firm. A recent case was also relied upon : Shivram Poddar v. Income-tax Officer, Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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