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TMI Blog1983 (5) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... 31 of the Second Schedule to the I.T. Act, 1961. The amount sought to be recovered was stated to be Rs. 11,16,927. The Bhilai Steel Plant all the same deposited a sum of Rs. 12,20,017 on May 6, 1982, in the court. Meanwhile, the non-applicants Nos. 3 to 7 filed suits at Baroda for recovery of certain amounts against Dilip Construction Company. The claims were not opposed and consent decrees were obtained. At the same time, the decrees so obtained also created a charge upon the amount payable by the Bhilai Steel Plant to the Dilip Construction Company. These decree-holders (non-applicants Nos. 3 to 7) got those decrees transferred to Durg for execution. They filed executions to enforce the charge against the amount deposited by the Bhilai Steel Plant for payment to the Dilip Construction Company. Applications for rateable distributions were also filed by those decreeholders. Yet another claimant was Ramkrishna Shenoy, the applicant in the other Civil Revision No. 40 of 1983. He has to recover a sum of Rs. 10,996.05 from Dilip Construction Company for which he had obtained a decree. The decree was put into execution and a prohibitory order was obtained against the Bhilai Steel Plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vil Revision No. 40 of 1983 by Ramkrishna Shenoy, whose claim for recovery of the amount has been dismissed as barred by time. The I.T. Department claims that the entire amount for which the TRO issued a prohibitory order must be made available to it and should be allowed to be appropriated towards the dues against the firm and against the partners individually. It was argued that after the issuance of the prohibitory order, the court has no jurisdiction to issue any process against that amount at the instance of other claimants against the assessee, namely, the Dilip construction Company, to whom the amount belonged. It was also argued that the charge created under various decrees in favour of non-applicants Nos. 3 to 7 is void and that the tax dues against the firm should be recovered from the partners and vice versa. Section 222(1) of the I.T. Act permits the ITO to forward to the TRO a certificate under his signature specifying the amount of arrears due from the assessee when the assessee is in default or is deemed to be in default in making payment of tax. This section further provides that on receipt of such certificate from ITO, the TRO shall proceed to recover from the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and to no other property because the notice under r. 2 contemplates notice only to the defaulter and the property to be attached under r. 4 is the property of the defaulter. In the case in hand, the prohibitory order issued under r. 31 attached the entire amount which was due and payable only to the firm, Dilip Construction Company. This entire amount payable to the firm undoubtedly is the asset of the firm itself. The prohibitory order issued under r. 31, however, clearly stated that it was for realisation of the arrears of income-tax dues against the firm as also dues against the individual partners. All the same, the property in the custody of court or the public officer which is permitted to be attached under r. 31 is the property of the defaulter-assessee and not of any other person. Therefore, the prohibitory order issued under r. 31 shall be effective only to the extent of the amount of tax to be recovered from the firm. It will have no effect and shall bear no consequence relating to the dues against the individuals because no part of that amount belonged to the individual partners. The findings of the executing court in this behalf are well founded. To meet the above s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in respect of his share of income in the firm. There is further no evidence to show that the tax levied cannot be recovered from those partners. Shri Rawat, however, pointed out that on June 11, 1982, an affidavit was filed by the TRO stating that the partners have no visible source of income. That affidavit, however, is not enough. The applicant should have placed tangible material on record to infer that the tax levied against the partners of the firm could not be recovered from them. In the absence of any such material, it is not possible to give to the applicant the benefit of s. 182(4). In Manohar Lal Ahuja v. HO [1984] 148 ITR 608 (All), a Division Bench of the Allahabad High Court has laid down that recovery of tax assessed on a partner can be made from the firm at the time of making the assessment only when it cannot be recovered from him (partner). It has further been said in that decision that after the firm is dissolved, the tax liability of individual partners cannot be satisfied from the assets of the firm in the absence of provision similar to second proviso to s. 187(1) in s. 189(3). No decision to the contrary, however, was cited. I am, therefore, of the opinion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, therefore, was in continuance of the initial execution application and, in my opinion, the execution court has gone wrong in treating it as a fresh execution application and, consequently, holding it to be barred by limitation. Instead, the application was made only for direction to pay the amount attached in terms of r. 46A of 0. 21 of the CPC. The garnishee (the Bhilai Steel Plant) had stated that the amount was deposited in court and, therefore, nothing was required to be done except directing the payment of amount to the decree-holder, Ramkrishna Shenoy. Shri S.C. Pandey, who intervened on behalf of the various decreeholders who obtained decrees against the Dilip Construction Company, argued that the subsequent application filed by the applicant must be treated as a fresh application and mere continuance of attachment will make no difference. He relied upon a decision in Gulabchand Sheolal Firm v. Dongarmal Harakchand Firm, AIR 1936 Nag 277. That decision, in my opinion, is no authority on the facts of the case in hand. There certain immovable property was attached and the proceedings were taken to put the property to sale. On the date of hearing, it appears that the execut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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