GEORGE C V Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE short, but important, question of law that falls for decision in this writ petition is whether the term "assessee" occurring in Sub-section (1) of Section 222 of the Income-tax Act, 1961 (Act 43 of 1961), hereinafter referred to as "the Act", in the context of the definition in Section 2(7), and other relevant provisions of the Act, would include the partners of the firm in a case where the assessment under Section 143(1) of the Act is in the name of that firm, and the certificate issued under Subsection (2) of Section 222 also is in the name of that firm.

(2.) THE facts relevant are few and are not in dispute. THE petitioners are partners of a firm known by name "Mutual Benefit Corporation, Calicut." For the assessment years 1965-66 to 1971-72 there was arrears of income-tax from the firm to the tune of Rs. 70,763. THErefore, certificate for recovery under Section 222(2) of the Act was issued by the first respondent, Income-tax Officer, Asst. II, Calicut, on whose file the petitioners and the firm are assessees under the Income-tax Act. On the basis of the recovery certificate issued by the first respondent, the second respondent (Income-tax Officer, Collection (Addl.), Calicut), issued exhibit P-l, Notice No. 46-001-FQ-7570/CLT, dated August 29, 1972, to the petitioners. To exhibit P-l notice the 3rd petitioner filed exhibit P-2 reply dated October 7, 1972. THEreafter, exhibit P-3 reminder was sent by the 2nd respondent to the petitioners adverting to exhibit P-2 reply also.

(3.) THE admitted fact is that under Section 2(31) read with Section 4 of the Act, the firm as well as its individual partners are separate assessable entities and both are chargeable to tax in respect of the income earned by the partners carrying on business under the partnership. It is also an accepted "proposition that though, in common law, the firm is not a legal entity, but only a compendious expression for representing the partners collectively, by virtue of the provisions contained in Section 2(31) of the Act, by means of a legal fiction, the firm is treated to be a person. THE argument advanced by Sri P. A. Francis, counsel for the revenue, is that, though there is such a fiction, the applicability of that fiction ceases when the assessment is complete. In support of this argument counsel for the revenue relies on a decision of the Allahabad High Court in Sahu Rajeshwar Nath v. Income-tax Officer, 1964 54 ITR 755 wherein at pages 757 and 758 there is the following observation by Pathak J., who delivered the judgment on behalf of the Division Bench :