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TMI Blog1973 (9) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... 967-68, the said firm was assessed to income-tax as an unregistered firm. As per the assessment order dated February 12, 1968, the firm was liable to pay Rs. 32,840. The petitioner unsuccessfully challenged the assessment order in appeal before the Appellate Assistant Commissioner and also on further appeal before the Income-tax Appellate Tribunal. After November 13, 1966, the petitioner became a partner of a new firm named Hindusthan Drug House. On March 30, 1969, the Income-tax Officer (Collection), Circle-1, Bangalore-1, issued a certificate under section 222 of the Act to the Tax Recovery Officer, Bangalore, to recover a sum of Rs. 31,919 together with certain interest. The certificate showed the assessee in default as "Hindusthan J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance tax, specified as payable in a notice of demand under section 156 shall be paid within thirty-five days of the service of the notice at the place and to the person mentioned in the notice : Provided that, where the Income-tax Officer has any reason to believe that it will be detrimental to revenue if the full period of thirty-five days aforesaid is allowed, he may, with the previous approval of the Inspecting Assistant Commissioner, direct that the sum specified in the notice of demand shall be paid within such period being a period less than the period of thirty-five days aforesaid, as may be specified by him in the notice of demand...... (3) Without prejudice to the provisions contained in sub-section (2), on an application made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased, shall be jointly and severally liable for the amount of tax, penalty or other sum payable, and all the provisions of this Act, so far as may be, shall apply to any such assessment or imposition of penalty, or other sum." Rules were framed providing the procedure for the recovery of tax. Rule 1 in the Second Schedule of the Act defines "certificate" as a certificate received by the Tax Recovery Officer from the Income-tax Officer for the recovery of arrears under the said Schedule. The same rule defines "defaulter" as the assessee mentioned in the certificate. Rule 32 of the Second Schedule provides: "(1) Where the property to be attached consists of an interest of the defaulter, being a partner, in the partnership property, the Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration before the Supreme Court in Sahu Rajeshwar Nath v. Income-tax Officer That case arose under the Indian Income-tax Act, 1922. The assessee therein was an unregistered firm of partnership. A certificate of recovery was also issued in the name of the said assessee. On the strength of the certificate, the Tax Recovery Officer proceeded against the partner of the firm to recover the amount of arrears of tax due from the assessee. He challenged the said recovery proceedings, contending that it was not open to the Collector, on receipt of a certificate under section 46(2), to recover from the partner the amount of tax due by the unregistered partnership. Repelling that contention, the Supreme Court held : "The proviso to section 46(2) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tried and determined...' In the present case we see no reason why the Collector should not execute the certificate for demand of income-tax against the appellant who admits that he was a partner of the unregistered firm for the relevant accounting year. In the return filed by the unregistered firm on January 19, 1945, at page 33 of the paper book also the appellant is shown as one of the partners. It is manifest that the provisions of Order XXI, rule 50(2), apply to the present case mutatis mutandis and since the appellant does not dispute that he was a partner of the unregistered firm for the relevant accounting year, the Collector could lawfully proceed to execute the certificate under section 46(2) of the Act against the appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of liability to pay tax is not sufficient to recover the tax. Liability may be there when an assessment order is made. But there should be machinery provision to enforce that liability. That apart, the contention that the word "defaulter" in rule 32 means and includes a partner, would run counter to the entire scheme of the Act. When an order is made under the Act and when tax is payable thereunder, the Income-tax Officer shall serve upon the assessee a notice of demand in the prescribed form, specifying the sum so payable (section 156). The said sum specified in the notice shall be paid within thirty-five days of the service of notice [section 220(1)]. If the amount is not paid within the time limited or extended, as the case may be, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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