LADHURAM TAPARIA Vs. D K GHOSE

JUDGEMENT

(1.) A firm, assessed to income-tax, contends in this appeal that, the proceedings for the recovery of the tax, initiated against it, are altogether bad and that the four objections taken by it before the learned trial Judge should have all been allowed, instead of being turned down, as they were, The assessment itself is not in question in this appeal. We are informed that the appellant has preferred an appeal to the Supreme Court against the order of the Income-tax Appellate Tribunal and that that appeal is pending. The questions raised in the present appeal are limited to the validity of the certificate proceedings commenced against the appellant and the authority of the officer who is carrying on those proceedings.

(2.) The material facts are as follows. The firm is said to have been formed on 28th of February, 1941, though the instrument of partnership was executed on 16th of October, following. Registration of the firm under the Partnership Act was duly made. The first assessment, which was for the assessment year 1941-43. was made on the basis that the firm was a registered firm and the assessments for the two subsequent years were also made on the same basis. On 9th of July, 1947, the firm submitted its return for the assessment year 1945-46 and the total income shown by that return was Rs. 33,105/-. By an amended return filed on 26th of January, 1948. the income-was raised to Rs. 33,308/-. The Income-tax Officer made his assessment on 29th of March. 1950, but in doing so, he refused renewal of registration and determined the assessable income at Rs. 10.23.888/- as against the returned income of Rs. 33,308/- The tax payble on the income, so determined, was Rs. 8,67,239-10-0. By a notice dated 30th of March, 1950, issued under Section 29 of the Income-tax Act. the firm was called upon to pay the tax assessed on or before 20th of April, 1950.

(3.) The firm preferred an appeal, both against the order of assessment and the order refusing renewal of registration, but it did not remain content with pursuing these remedies provided for by the Act itself. On 20th of July. 1950, it moved this Court under Article 226 of the Constitution and appears to have obtained a Rule. An interim order was also made on 26th of February, 1951 whereby the Income-tax Officer was restrained from enforcing the demand pending the disposal of the Rule. The latter order was subsequently modified on 2nd of March, 1951 and the Income-tax Office was permitted to send a certificate under Section 46 (2) of the Act, because unless nroceed-ings for recovery were commenced within one year from the last day of the financial year in which the demand had been made, the tax would become irrecoverable, and in the event of the Rule being discharged, grave prejudice would be caused to the revepue. Upon obtaining a modification of the stay order, the Income-tax Officer forward- ed a certificate under Section 46 (2) of the Act to the Collector, 24-Parganas, oh 26lh of March, 1951, but at the same time informed the Collector that in view of the stay order, the certificate was not to be executed until further notice. The debt mentioned in the certificate was Rs. 8,67,239-10-0. On 31st of March, 1951, one Mr. K. P. Nayak, a Certificate Officer, 24-Parganas, appears to have signed and filed a certificate under Section 4 of the Public Demands Recovery Act in his Office and initiated a proceeding, registered as Proceeding No. 2927 I. T. of 1950-51. nO further action was taken, but, on the other hand, the proceedings were stayed till 17th of July, 1952.