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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 ..... e 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 Jewellery Mart". Pursuant to the said certificate, the Tax Recovery Officer issued a notice of demand for Rs. 35,710 to the Hindusthan jewellery Mart. The petitioner recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 by the assessee before the expiry of the due date under sub-section (1), the Income-tax Officer may extend the time for payment or allow payment by instalments, subject to such con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Tax Recovery Officer may make an order charging the share of such partner in the partnership property and profits with payment of the amount due under the certificate, and may, by the same or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) of the Act states that the Collector shall, without prejudice to any other powers in that behalf for the purpose of recovering the said amount, have the powers which under the Code of Civil Procedur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 recover the income-tax arrears from him." The principles of the above decision cannot be extended to a certificate issued under section 222 of the Act, because rule 50 of Order XXI of the Code of Civil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion 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, the assessee shall be deemed to be in default [section 220(4)]. When an assessee is in default or is deemed to be in default in making payment of the tax, the Income-tax Officer may forward to the Tax Recovery O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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