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TMI Blog1982 (5) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... th the firm, M/s. Moula Bux, the assessee. Upon consideration of the facts and circumstances and the evidence on record, the learned subordinate judge concluded that the plaintiff, Sk. Madar Bux, was a partner of the unregistered firm. The certificate had been filed for recovering the income-tax from the said unregistered firm before its dissolution in April, 1946. The learned subordinate judge applied the ratio of the Division Bench decision of this court in R.N. Bose v. Manindra Lal Goswami [1958] 33 ITR 435 (Cal), and held that the said assessment made of its pre-dissolution income in the name of the said unregistered firm was illegal and realisation of the said tax from the plaintiff was also without jurisdiction. The certificate issued under s. 46(2) of the Indian I.T. Act, 1922, against the plaintiff was also pronounced as illegal by the court below. The learned subordinate judge, for the said reasons, has declared the certificate case to be without jurisdiction. Mr. Pal, appearing on behalf of the appellant, Union of India, has made a four-fold submission before us. The plaintiff 's challenge against the aforesaid assessment orders made under the Indian I.T. Act, 1922, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned assessment of income-tax made in the name of the said partnership firm were illegal and that the said assessment ought to have been made in the names of the two individual partners of the unregistered firm. It is undisputed that on or about 24th August, 1948, in the office of the ITO, Burdwan, the income-tax returns under s. 22 of the Indian I.T. Act, 1922, in respect of the income-tax year 1944-45 were filed in the name of M/s. Sk. Moula Bux described as a firm with Sk. Madar Bux and Sk. Moula Bux as the partners. On the same date similar income-tax returns for 1945-46 and 1946-47 were filed on behalf of the firm, M/s. Sk. Moula Bux, with Sk. Madar Bux and Sk. Moula Bux as partners (vide Exs. D and D-1). In the said assessment proceeding Mr. Ambujaksha Paul had filed vakalatnama executed by Sk. Madar Bux (vide Ex. E series). On 30th August, 1948, the ITO, Burdwan, under s. 23(3) read with s. 34 of the Indian I.T. Act, 1922, passed his assessment orders in respect of the aforesaid returns submitted on behalf of Sk. Moula Bux. The ITO found that Sk. Madar Bux and Sk. Moula Bux, who were uncle and nephew, had done business as proprietors. Subsequently, there was a dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m time to pay the arrear taxes. Sk. Madar Bux in his petition (Ex. F-12) dated 12th of July, 1949, had offered to pay Rs. 7,000 and had prayed that he may be granted instalment to pay the balance dues. Sk. Madar Bux in his petition (Ex. F-14) filed on 24th September, 1949, had submitted that he had deposited till then a sum of Rs. 12,000 and had renewed his prayer for granting him instalments. On 5th November, 1951, Sk. Madar Bux wrote a letter to the ITO, Non-companies Income-tax-cum-Excess Profits Tax District, Calcutta, submitting that his properties had been advertised for sale in Certificate Case No. 867 of 1948-49 by the Certificate Officer, Burdwan. Sk. Madar Bux claimed that he was a pauper and he had no means to pay the demand dues. He was going to apply to the insolvency court for protection. On 26th November, 1951, in his letter (Ex. F-6), he again expressed his inability to pay the dues and prayed that the dues may be realised from Sk. Moula Bux. From the records of the case it does not appear that Sk. Madar Bux 'had filed any petition under s. 9 of the Bengal Public Demands Recovery Act denying the liabilities for the aforesaid certificate dues. There was also no adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment orders and of the certificate under s. 46(2) of the said Act, the learned subordinate judge could not have declared that the certificate issued and filed in the name of the plaintiff in the office of the Certificate Officer, Burdwan, were without jurisdiction, ultra vires and ab initio null and void and not binding upon the plaintiff. The Indian I.T. Act, 1922, created the liability to pay income-tax and also provided for a determination of the right or liability in respect of the same. Section 67 of the said Act expressly excluded the civil court's jurisdiction in these matters. The plaintiff, Sk. Madar Bux, did not challenge the vires of any of the provisions either of the Indian I.T. Act, 1922, or those of the Bengal Public Demands Recovery Act. Further, when there was an adequate remedy provided under the said two Acts for doing what the learned subordinate judge has done, we are inclined to hold that the instant suit was not maintainable in the civil court. In this connection, the learned advocate for the appellant, Mr. Pal, has correctly relied upon the decision of the Supreme Court in Dhulabhai v. State of Madhya Pradesh, AIR 1969 SC 78 ; [1968] 22 STC 416 (SC). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is plaint that the I.T. assessments in the name of the unregistered firm were void ab initio. In our view, in the suit, as framed, there was no scope for adjudicating whether or not the assessment order made under the Indian I.T. Act, 1922, and the certificate granted under s. 46(2) of the said Act were illegal and without jurisdiction. The plaintiff not only did not pray for any relief in respect of the said assessment orders and the certificate under s. 46(2) of the Indian I.T. Act, 1922, but also he did not even implead either the ITO concerned or even the Certificate Officer in whose office the certificate had been filed. The plaintiff did not pray for, and the court below did not grant, any consequential relief either in respect of the assessment order or the certificate case. In our view, before adjudicating on the validity or otherwise of the assessment orders and the certificates issued and filed in the name of the plaintiff, Madar Bux, both the ITO and the Certificate Officer ought to have been given opportunities to contest the suit. We are fully aware of the fact that the defendants did not raise in the trial court the question of non-joinder of the said authorities. But ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Demands Recovery Act. Manindra Lal had filed an objection which was rejected by the Certificate Officer. While his appeal against the same was pending before the Commissioner, he had also moved this court under art. 226 of the Constitution. During the pendency of the writ case, the learned Commissioner, Presidency Division, had allowed the appeal of Manindra Lal and had set aside the proceeding under the Bengal Public Demands Recovery Act. Sinha J. had made the rule obtained by Manindra Lal absolute, holding, inter alia, that Manindra Lal could not be proceeded against for tax dues and the assessment in the name of the dissolved unregistered partnership firm was not possible in law. Chakravartti C.J. affirmed the finding of the learned trial judge that on the notices issued under s. 34 of the Indian I.T. Act, 1922, there could not have been any assessment of the firm at all and the firm could not be proceeded against for recovery of tax imposed by such assessment. Although the said finding about the invalidity of the notices under s. 34 of the Indian I.T. Act, 1922, was sufficient for the disposal of the appeal, on the prayer of the learned advocate for the I.T. Dept. Chakravartti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned advocate for the plaintiff-respondent had conceded at the time of the hearing of the appeal that even though the firm had been since dissolved, a certificate could be legally filed against the firm in its own name as the assessment had been made against the firm when it was a going firm but urged that when the demand had been also served upon the firm, the personal goods of the plaintiff, who was an ex-partner, could not be attached. The Division Bench was of the view that the certificates were executable also against the plaintiff-respondent personally and did not accept the submission of the appellant that he was not liable to pay income-tax levied upon the firm without fresh assessment. The court had referred to the provisions of s. 44 of the I.T. Act and also of 0. 21, r. 50 of the CPC and held that the income-tax itself would be recoverable from the plaintiff after his name is mentioned in the certificate as certificate debtor. The court held that the certificates could be levied against the plaintiff only after the certificates were amended and fresh notice under s. 7 of the Bengal Public Demands Recovery Act was served upon the plaintiff in his personal capacity. Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... war Nath's case was partner of a firm who claimed to have sold away his share in the partnership firm. The assessment was made in respect of the firm's income for the period prior to his said sale and a certificate under s. 46(2) of the I.T. Act had been forwarded for recovery of tax due. The appellant had filed a writ application for restraining the respondents from recovering the tax from him. The Supreme Court rejected the contention that without, separate notice under s. 29 of the I.T. Act, the recovery proceedings could not be initiated against the appellant. According to the Supreme Court, the expression " other person liable to pay " in s. 29 of the said Act did include a partner of an unregistered firm because his liability was not imposed on account of the provisions of the I.T. Act itself. The court referred to s. 25 of the Partnership Act and also to 0. 21, r. 50(2) of the Code. The Collector under s. 46(2) of the Indian I.T. Act 1922, according to the Supreme Court, for the purpose of recovering the amount, have the powers which a civil court, under the CPC, has for the purpose of recovery of an amount due under a decree. In the result, it was held that the tax due from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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