KANDAPPA GOUNDER P Vs. FIFTH INCOME TAX OFFICER

JUDGEMENT

(1.) THE petitioner is aggrieved against an order of attachment of immovable/property passed by the 2nd respondent in his proceedings dated August 31, 1965. He is seeking for a writ of prohibition against the respondents from giving further effect to the impugned notice in the following circumstances,

(2.) THE petitioner's case is that he was admittedly a partner of an un-registered firm carrying on business under the name and style of Standard Starch Products Company, Salem. It is not in dispute that this business was carried on in land No. 48 in Sandhiyur Village, Salem Taluk. THE petitioner was no doubt associated in partnership with N. Jagannathan, P. Kandasami Chettiar and M. Doraisami Chettiar. But the petitioner's case is that their trading style was different from the one adopted by the firm against which the revenue initiated proceedings to assess the firm for the first time for the year 1946-47. What happened was that, during the year of assessment, the Standard Starch Manufacturing Company or the Standard Starch Products Company doing business at the place, which is admittedly localised in this case, did not submit their returns in accordance with law for being assessed under the provisions of the Income-tax Act. THE revenue, however, discovered through its inspector that business on a large scale had been conducted at the place by an unregistered firm and, therefore, action was initiated under Section 34 of the Indian Income-tax Act, 1922, On August 19, 1952, notice under Section 34 was served on Mr. Jagannathan who was admittedly a partner of the unregistered firm. THEre was, however, no response either from the partners who constituted the firm or the partnership firm as such. THErefore, the Income-tax Officer finalised the assessment according to the best of his judgment on March 16, 1954. Pursuant to the completion of the assessment proceedings, a demand notice was raised and the amount covered by the demand was sought to be recovered through the Tahsiklar, Salem. THE above notice apparently was served on the petitioner too. It is at this juncture that the petitioner conies into the picture and claims that he is not in any way responsible to meet the demand, as he had nothing to do with the firm of Standard Starch Manufacturing Company, and that he did not do any business under that trade name during the year 1946-47. THE department, however, put the petitioner on notice that he and the three other persons referred to above were in fact doing business at the place mentioned already, that the demand was raised under Section 44 of the Income-tax Act, and that the petitioner could not escape liability. Ultimately, on October 18, 1962, a notice under Section 226(3) of the Income-tax Act, 1961, was issued to the persons concerned, including the petitioner, calling upon them to pay Rs. 7,026.13 after deducting a sum of Rs. 7'7S alleged to have been collected. THE petitioner obviously resisted the claim. But, it is common ground that he appeared on summons being served on him under Section 131 of the Income-tax Act and that the Income-tax Officer, who examined one of the partners of the unregistered firm by name, Mr. Jagannathan, gave an opportunity to the petitioner to state his case and cross-examined Mr. Jagannathan as well. In the statement given by Mr. Jagannathan and also in his deposition, he has stated that the trading style of the unregistered firm is Standard Starch Products Company and not Standard Starch Manufacturing Company. Mr. Jagannathan was cross-examined and it was nowhere suggested that the petitioner was totally unconnected with the business which was conducted at the place referred to by me earlier. Nor was it suggested that there was no partnership at any material point of time between the petitioner and Mr. Jagannathan who was examined by the Income-tax Officer in the presence of the petitioner. THE records produced on the issue of rule nisi did disclose that the attempt of the petitioner was to disclaim responsibility on the ground that the company which was assessed by the revenue was a totally different one with which he. had no business connection whatsoever at any point of time. After the examination as above, the revenue raised the demand dated August 31, 1965, which is impugned in this case. In the notice the properties of the petitioner are sought to be attached and he is restrained from transferring or charging the properties specified in the notice. It is as against this order the present writ petition has been filed seeking for a writ of prohibition against the respondents from recovering the sum of Rs. 7,026.13 in pursuance of the attachment order and declaring the petitioner as not liable to pay the said sum.