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TMI Blog1972 (9) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered under the provisions of the Income-tax Act, 1961, for the assessment year 1968-69. On the expiry of the excise licence the firm was dissolved because it did not succeed in obtaining a licence for the subsequent year. For the assessment year 1968-69, the firm was assessed under the Income-tax Act and it being a registered firm the total income of the firm was allocated to the partners and taxed in their hands. It appears that Shyam Bihari failed to pay the tax assessed on him. The Income-tax Officer passed an order under section 182(4) of the Act on September 20, 1971, demanding from the petitioner a sum of Rs. 5,178 being the arrears of tax due from Shyam Bihari. The petitioner has challenged that order in this petition. The conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent. of the share of each partner in order to meet this liability. In the instant case, the firm did not retain anything from the share of Shyam Bihari. That circumstance, however, does not absolve the firm from the liability cast upon it under section 182(4). The provision enabling the firm to retain a part of the income of the partners is meant for its benefit but if it does not avail of the benefit, its liability under this provision is not affected. This position is not altered even if the firm is dissolved or its business is discontinued. Section 189 of the Act provides: " 189. Firm dissolved or business discontinued.-(1) Where any business or profession carried on by a firm has been discontinued or where a firm is dissolved, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral liability of the partners. In order that section 182(4) may be invoked, there must exist two conditions : (1) that the tax is not recoverable from the partner on whom it has been assessed ; (2) that the tax sought to be realised under this provision must not exceed 30 per cent. of the defaulting partner's share in the profits of the firm. Both these conditions are satisfied in the present case. There is a clear assertion in the affidavit of Sri J. C. Mathur that the tax sought to be realised from the petitioner is not recoverable from Shyam Bihari and there is no assertion in the writ petition that the tax sought to be recovered from the petitioner exceeds 30 per cent. of the share of Shyam Bihari in the profits of the firm. Shri Raja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comes the joint and several liability of each partner by virtue of section 189(3) of, the new Act. Section 44 of the old Act corresponds to section 189 of the new Act, but that provision by itself is not enough to make the dissolved firm or its liable for the payment of tax of another partner, who has defaulted in payment. It is section 182(4) of the new Act which brings about such a situation. In Kalva Suryanarayana v. Income-tax Officer the Supreme Court has merely reiterated its earlier view and has held that when tax is levied upon the partners of a registered firm assessed after its dissolution under section 23(5)(a) read with section 44 of the old Act, there is no joint and several liability of the partners in respect of the tax paya ..... X X X X Extracts X X X X X X X X Extracts X X X X
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