OM PRAKASH GUPTA Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE applicant, Om Prakash Gupta, along with three others formed a partnership and carried on the business of supplying fire-wood and other articles to the Government in the Military Department in the name any style of Om Prakash & Bros. THE other partners were Sri Kashi Nath of Dehra Dun, Sri Ram Chandra of Dehra Dun and Sri Beru Ram of Solan. All the partners had one-fourth share each. On March 18, 1949, the Income-tax Officer, Excess Profits Tax Circle, Kanpur, assessed the aforesaid firm in the status of an association of persons in respect of the business for the assessment year 1944-45 on an income of Rs. 2,07,451. On this excess profits tax amounting to Rs. 1,14,334 was demanded and an income-tax was further levied on the balance of Rs. 93,117. THE total liability came to Rs. 1,57,575. On appeal the assessment was set aside and the Appellate Assistant Commissioner directed fresh assessment to be made by his order dated June 13, 1950. In the meantime the partnership firm field a suit against the Dominion of India in the Court of the Civil Judge, Dehra Dun, claiming certain amount of money against the Government. THE suit was decreed on July 26, 1948, for a sum of Rs. 1,24,572 against the Dominion of India. THE amount was deposited on behalf of the Dominion of India in the Court of the Civil Judge. THE Income-tax authorities got the money attached. When the assessment was set aside by the Appellate Assistant Commissioner, the attachment ceased. On November 27, 1950, the applicant applied to the Commissioner of Income-tax requesting him to ask the Civil Judge not to pay the amount in deposit and get the assessment expedited. On December 9, 1950, the Income-tax Officer, Dehra Dun, thereafter made an ex parte assessment on an income of Rs. 2,07,351; and excess profits tax amounting to Rs. 1,14,234 and an income-tax amounting to Rs. 93,117 were levied. THE decretal amount in deposit with the Civil Judge was again attached for the payment of the taxes and the Civil judge by his order of May 31, 1951, directed that out of the deposit of Rs. 1,24,572 a sum of Rs. 1,12,036-0-6 be paid to the Income-Tax Officer. THE second assessment was again set aside on an application made by the petitioner under section 27 of the Income-tax Act on August 24, 1953, and a fresh assessment was made on the firm as on a registered firm on an income of Rs. 29,346. THE Excess Profits Tax Officer, acting under section 10A of the Excess Profits Tax Act, added to the firms income assessed as above the incomes of the two other firms in which the four partners of this firm were partners and made the final assessment by which the firm became liable to pay Rs. 54,026-10-0 as excess profits tax. After the amount of tax liability had been reduced to Rs. 54,026-10-0, the applicant applied to the Commissioner of Income-tax, U.P., on September 28, 1953, praying that out of the sum of Rs. 1,12,036-0-6 received by the Department through the Civil Judge, the Income-tax Officer directed to adjust the amount of Rs. 54,027 due against the firm and refund one-fourth of the balance to the petitioner after further setting off Rs. 1,703-4-0 the income-tax due from the petitioner on his income as a partner. THE applicant thus asked for a refund of Rs. 16,145-9-0 which was retained by the Department. THE Commissioner of Income-tax wrote a letter to the petitioner that he had issued the necessary instructions to the Income-tax Officer, Dehra Dun. On December 5, 1953, the petitioner wrote to the Income-tax Officer, Dehra Dun, for the refund of the aforesaid amount. THE Income-tax Officer did not reply to the letter of the applicant and the applicant thereafter approached the Central Board of Revenue. THE Income-tax Officer refused to pay a sum of Rs. 16,000 and odd and the applicant was informed by the Income-tax Officer that he proposed to appropriate under section 44 of the Income-tax Act the entire balance towards taxes due from the other partners in respect of their personal assessment.

(2.) A counter-affidavit has been filed on behalf of the opposite parties in which it is stated that out of the total sum of Rs. 1,12,036-0-6, recovered from the Civil Judge, Dehra Dun, by the Department, the share of the applicant comes to Rs. 31,355-7-0. A sum of Rs. 27,013-5-0 was realised from the applicant on account of excess profits tax demand against the firm in which he was a partner. A sum of Rs. 1,703-4-0 was due against the applicant on account of income-tax demand in respect of the personal assessment which had also been adjusted. After adjusting the same, an amount of Rs. 2,638-14-0 due to the applicant was sent to the Civil Judge for payment to the applicant and it is open to the applicant to apply to the Civil Judge for the payment of the said amount.