INCOME TAX OFFICER Vs. GEORGE C V

JUDGEMENT

(1.) THE question is whether the partners of a registered firm are liable to be proceeded against for recovery of tax assessed on the firm as such under the Income-tax Act, 1961 (for short "the Act"), pursuant to a certificate issued to the Tax Recovery Officer as envisaged by Section 222 of the Act. THE learned judge before whom this question arose answered it in the negative, allowed the writ application and issued a direction not to enforce exhibits P-l and P-3 communications sent by the Tax Recovery Officer.

(2.) IN exhibit P-l addressed to the partners it was stated that "a sum of Rs. 70,763 is outstanding as arrears towards income-tax, penalty, interest, etc., from the firm, M/s. Mutual Benefit Corporation, Calicut, of which you are a partner....." The three partners who are respondents in this writ appeal protested by exhibit P-2 and contended that the arrears of income-tax due from the firm, M/s. Mutual Benefit Corporation, cannot be recovered from the partners. The reply to exhibit P-2 is in exhibit P-3 and it was stated therein:

(3.) THE question arose before the Supreme Court whether the partners of a firm, which has been as such assessed to income-tax under the Act, can also be said to be liable under the Act for the tax assessed on the firm. THE answer to the question was that the liability of the partners arose under Section 25 of the Indian Partnership Act and such liability was not a liability which arose under the Act by virtue of the assessment order. We shall extract the relevant passage in the decision in Sahu Rajeshwar Nath v. Income-tax Officer, C-Ward, Meerut, [1969] 72 ITR 617, 620 (SC):