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TMI Blog1964 (12) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... GIR No. 123-KOffice of the Income-tax Officer, A-Ward, Hyderabad, Dated : 22-6-1961. Notice under section 45 of the Income-tax Act. Income-tax arrears-Collection of-M/s. Kalva Suryanarayana (1st Gulmoha Contract) 1951-52. Whereas Sri Kalva Suryanarayana has been a partner in the firm of M/s. Kalva Suryanarayana (1st Gulmoha Contract) in the assessment for the year 1951-52 which has since been dissolved, Whereas the partners in the said firm, which has been assessed as registered firm, Sri M. Veeraiah and Sri H. Siddappa, have been found to be liable to tax of ₹ 10,654.62 nP. and ₹ 5,640.62 nP. respectively, Whereas the said tax is still in arrears and has not been paid, I call upon Sri Kal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e enhanced by a sum of ₹ 1,72,149. In pursuance of that order, the respondent, by an order dated March 11, 1955, revised the assessment and determined the total income of the firm at I.G. ₹ 3,13,189 and it was apportioned among the several partners in proportion to their shares, and demands were raised against the individual partners of the dissolved firm. It would appear that the petitioner and D. Sayappa paid their shares of the tax, but M. Veeraiah and H. Siddappa failed to pay their shares, which were ₹ 10,654.62 nP. and ₹ 5,640.62 nP. respectively. The impugned notice was issued to the petitioner calling upon him to pay up those arrears on the footing that under the provisions of section 44 of the Act, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the discontinuance and for fastening of liability for the amount of tax found due on such assessment. In terms, express and explicit, the section saddles the erstwhile partners of a dissolved firm with joint and several liability to assessment as well as for the amount of tax payable. It is well established that section 44 of the Act applies as much to registered firms as to unregistered firms and it declares the liability of all discontinued firms and not merely of unregistered firms: see Commissioner of Income-tax v. S.V. Angidi Chettiar [1962] 44 ITR 739 (SC). In C.A. Abraham v. Income-tax Officer, Kottayam [1961] 41 ITR 425 (SC), the Supreme Court explained the scope and effect of section 44 thus (at page 429) : Section 44 se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion assessment used in these sections is not used merely in the sense of computation of income and there is in our judgment no ground for holding that when by section 44, it is declared that the partners or members of the association shall be jointly and severally liable to assessment, it is only intended to declare the liability to computation of income under section 23 and not to the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof. Nor has the expression, 'all the provisions of Chapter IV shall so far as may be apply to such assessment' a restricted content: in terms it says that all the provisions of Chapter IV shall apply so far as may be to assessment of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made assessable and the sum payable by him on the basis of such assessment, had to be determined. It was urged that as the tax payable by the firm as such was not determined, one partner could not be made liable for the tax payable by the other partner or partners. In our opinion, this argument is untenable because it overlooks the effect of section 44 which, as laid down by the Supreme Court in Abraham's case (supra), sets up the machinery for assessing the tax liability of a firm which has discontinued its business and for the enforcement thereof on the basis of joint and several responsibility of the quondam partners. The learned advocate for the petitioner sought to rely on two decisions as supporting his contentions-one, a dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inuance or dissolution of the association or partnership. In cases where the share of each of the partners was brought to tax prior to its discontinuance or dissolution, the liability of each of the partners is to be traced to that assessment. We do not think that section 44 seeks to enlarge the liability of individual partners already determined under section 23(5). The language of the section does not warrant the interpretation that notwithstanding that the prior assessment had computed the tax payable by each of the partners under section 23(5), it has fastened a joint and several liability of each of the partners. Similarly, in the Madras case (supra), the question that the court had to consider was formulated thus in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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