Y N KILLEDAR Vs. S S MALPATHAK

JUDGEMENT

(1.) By this petition the petitioner seeks to get quashed various notices and others of attachment issued by the respondents. The first respondent is the Additional Collector of Bombay & B.S.D., who had made orders regarding recovery of tax. Respondents Nos. 2 to 4 are all Income-tax Officers and the fifth respondent is the Tax Recovery Officer in the Collectorate of Thana.

(2.) In this case the question that falls for determination is whether the income-tax assessed and determined on a partner of a registered firm in respect of his share of profits in the firm could not be recovered from another partner in the events the revenue is unable to recover the tax payable by that partner. Facts that give rise to this petition in brief are as follows : The assessee firm was doing business in Bombay under the name and style of Messrs. Moosa Haji Mohamed Killedar and Brothers, its partners being M. M. Killedar, Y. N. Killedar, who is the petitioner before us, and Shri Haji Ahmed Noor Mohamed Killedar. The firm was assessed to the tax liability of Rs. 1,80,507.86 nP. for the assessment years 1948-49 and 1949-50. We are informed that in those years the firm was not treated as a registered firm. For the purposes of this case, however, we are not concerned with those years. At all material times, the assessee firm was registered under section 26A of the Indian Income-tax Act. The tax liability determined was in respect of the income-tax as also the excess profits tax. The tax liability of Mr. M. M. Killedar in his individual capacity determined for the assessment years 1943-44 to 1948-49 amounted to Rs. 59,967.48. The tax liability of the petitioner in his individual capacity for the assessment years 1947-48 and 1952-53 amounted to Rs. 2,964.61 nP and the tax liability of Shri Haji Ahmed Noor Mohamed Killedar for the assessment years 1945-46 and 1946-47 in his individual capacity amounted to Rs. 3,097.18 nP. On April 24, 1954, a notice was served on the petitioner to pay the entire aforesaid liability aggregating to Rs. 2,46,537.13 nP. On 6th July, 1961, the petitioner paid Rs. 1,80,507.86 nP. being the tax liability of the firm in respect of the income-tax and excess profits tax and Rs. 2,964.61 nP. being his individual tax liability. On the petitioners making these two payments, the Additional Collector of Bombay made an order withdrawing the attachment of the petitioner's property which at that time had been attached for the recovery of the aforesaid amounts. On the 29th of August, 1961, the 8th Income-tax Officer, Bombay, the second respondent hereto, served a notice on the petitioner calling upon him to pay the taxes outstanding against the other partners, namely, M. M. Killedar and Haji Ahmed Noor Mohamed, amounting to Rs. 59,967.48 nP. and Rs. 3,097.18 nP. respectively. It appears that the aforesaid tax liability of these two partners was not in its entirety their liability in respect to their share of profits in the aforesaid firm, but also included the tax liability of their other income. After considerable correspondence between the income-tax authorities and the petitioner, the claim was reduced to Rs. 29,149.47 nP. being the tax liability of these two partners in respect of their share of profits in the said firm received by them in the aforesaid assessment years. On the 8th of August, 1963, the Additional Collector of Bombay, the first respondent, issued a notice to the petitioner calling upon the petitioner to pay the said amount of Rs. 29,149.47 nP. On the 14th of August, 1963, the Tax Recovery Officer, the fifth respondent hereto, issued an order of attachment of immovable property of the petitioner for the recovery of the aforesaid amount of Rs. 29,149.47 nP. (erroneously mentioned as Rs. 63,064.66 nP. in the said order) It is these various notices and the order of attachment issued by the respondents which the petitioner is seeking to get quashed.

(3.) Mr. Mehta on behalf of the petitioner-assessee contends that the aforesaid partnership firm was a registered partnership firm during the relevant assessment years and, therefore, under the provisions of sub-section (5) of section 23 of the Indian Income-tax Act as it then stood prior to its amendment by the Finance Act of 1956, on income-tax was payable by the firm, nor was any tax payable by the firm itself, but on the other hand in the individual assessment of the aforesaid three partners, their share of income, profits and gains in the partnership were included and the tax payable by each partner in respect of their share and their other income was separately determined. In the circumstances, even though the stood dissolved on March 31, 1949, there was no provision in law entitling the respondents to recover from the petitioner-assessee the outstanding tax liability of the other partners in respect of their share of profits in the partnership firm.