COMMISSIONER OF INCOME TAX Vs. SUNDARAM

JUDGEMENT

(1.) THIS appeal by the Commissioner of Income-tax has come up before us on a reference by a learned single judge of this court and is directed against a judgment of the Civil Judge, Civil Station, Bangalore, in R.A. No. 80/1970. That appeal had been preferred by the plaintiff-1st respondent against the judgment and decree of the principal munsiff, civil station, Bangalore, in O.S. No. 326 of 1968.

(2.) THE facts relevant may be set out at some length and are as followd :

(3.) IT is alleged on behalf of the plaintiff that on the day the printing machine was mortgagee in favour of Suryanarayana, namely, April 1, 1963, the said Balasubramaniam had no subsisting interest in it and, therefore, the said mortgages was not entitled to include the same in the suit for the purpose of obtaining a decree for sale. Similarly, the pledge put forth by the 4th defendant-bank was not also valid. In the circumstances, the Tax Recovery Officer was not entitled to allow the claim of the 3rd respondent and release the machine from his custody, and he should, on the other hand, have asserted the department's "paramount claim or lien" and after arranging for the sale of the said machinery, entered full satisfaction or discharge of the tax dues of Balasubramaniam. IT is also alleged that the said claim proceedings had been gone through without notice to the owner, Balasubramaniam. IT is, however, admitted that on the day of the attachment in question Balasubramaniam was the owner of the said machinery. IT is to be remarked that Balasubramaniam and Jayalakshmi, the quondam partners, have not been made parties in these proceedings. In these circumstances it is contended that none of the partners of the dissolved firm would be liable to comply with the notice of the Tax Recovery Officer dated April 5, 1968, demanding the payment of the balance of tax due in a sum of Rs. 7,082.52.