A G PANDU RAO Vs. COLLECTOR OF MADRAS

JUDGEMENT

(1.) THESE two applications are by two partners of a firm known as P. Nagojee Rao & Son. The petitioners pray that this Court should issue a writ of certiorari calling for the papers and quashing the order of attachment made by the first respondent, the Collector or Madras, at the instance of the second respondent, and to prohibit him from recovering the demand amount of Rs. 88, 799-6-0, which was the tax levied on the firm under the Excess Profits Tax Act for the chargeable accounting periods commencing from 1st April, 1944, and ending with 31st March, 1946. W. P. No. 594 of 1953 was filed by Pandu Rao and W. P. No. 668 of 1953 by Thyagaraja Rao. The other partner of the firm besides these two partners was Gannu Rao. The share of Gannu Rao was 3/5th and Thyagaraja Rao and Pandu Rao were each entitled to 1/5th share. The partnership, which was commenced on 1st April, 1941, carried on its business without any dispute between the partners, as alleged in the affidavit filed in support of the applications, till about September, 1946. On 26th February, 1947, a suit for dissolution of the Partnership, C. S. No. 89 of 1947, was instituted on the original side of this Court in which a preliminary decree was passed on 14th November, 1947, dissolving the firm as from 26th February, 1947. A final decree followed and it was dated 26th November, 1952. Throughout, Gannu Rao was appointed Receiver and he was functioning as such.

(2.) THE firm was registered under Section 26A of the Income-tax Act and the income-tax in respect of the business carried on by the firm was duly assessed and paid by the partners. THEre is no dispute as regards the income-tax payable and throughout the returns were submitted by, and the person who took part in the proceedings the returns were submitted by, and the person who took part in the proceedings before the Income-tax Officer was Gannu Rao. So far as excess profits tax is concerned, there is no dispute that for the chargeable accounting years commencing from 1941 to 1944, it was duly levied on the firm and was paid by it. Here again, the return was submitted by Gannu Rao as managing partner. THE dispute now relates to the excess profits tax alone payable in respect of the chargeable accounting period, i.e., from 1st April, 1944, to 31st March, 1946. Proceedings under Section 13 of the Excess Profits Tax Act were commenced against the firm, and notice, it is not disputed, was served on Gannu Rao as managing partner of the firm.

(3.) UNLIKE the machinery provided under the Income-tax Act enabling a firm to get itself registered with a view to have the tax liability apportioned between the shares under Section 23 (5) of the Act, there is no provision in the Excess Profits Tax Act to register a firm and to apportion the tax liability between the partners of the firm and to Section 23(5) of the Act. The procedure under the Excess Profits Tax Act, by which assessment proceedings are initiated, is laid down in Section 13 of the Act. Notice to furnish a return in the prescribed form and verified in the prescribed manner, with respect to the chargeable accounting period, of the profits of the business during the period it is proposed to levy excess profits tax, should be issued to the person, whom the department believes to be engaged in the business to which the Act applies. Under Section 14, the assessment has to be made by the Excess Profits Tax Officer to the best of his judgment in respect of the profits liable to excess profits tax. Under sub-section (2) of Section 14, excess profits tax payable in respect of any chargeable accounting period shall be payable by the person carrying on the business in that period. "Person" is defined in the Excess Profits Tax Act as including a Hindu undivided family, but, in the absence of any further definition under the Act, one has necessarily to fall back upon the definition of "person" in the General Clauses Act, which includes also an association of persons. Under sub-section (3) of Section 14 it is provided that in the case of a partnership carrying on business in the chargeable accounting period, the assessment may be made in the partnership name. Section 21 of the Excess Profits Tax Act applies certain sections of the Income-tax Act to proceedings under the Excess Profits Tax Act, but subject, however, to any modification that may be made by the rules under the rule-making power conferred under the Act.