BAJRANGLAL CHOWKHANI Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS is an application under Arts. 226 and 227 of the Constitution for issuance of a writ of mandamus to the Certificate Officer, Cuttack, prohibiting him from proceeding with the certificate case against the petitioners. It was further prayed that the opposite party No. 1, the ITO, Cuttack, be prohibited from collecting the arrears of tax in question by the aforesaid certificate proceedings from the petitioners. The facts leading up to this application are these. One Natabarlal along with the petitioners carried on a partnership business under the name and style of M/s. Natabarlal Jayashankar, agent to Orient Dyeing and Printing Works, Cuttack. The sole purpose of the partnership, it is stated, was to work as commission agent of the Orient Dyeing and Printing Works. It is an admitted fact that the partnership worked for three years, that is from September, 1946 to March, 1949. The assessment to income tax for the year 1948 49 was completed on 19th Nov., 1949, and the assessment for the subsequent year 1949 50 was similarly completed on 23rd Dec., 1949. The assessment for the asst. year 1947 48, however, escaped assessment and a notice under S. 34 of the Indian IT Act was issued. The assessment for the said year was eventually computed on 19th March, 1952. A previous application under S. 26A of the Indain IT Act for the registration of the firm having been rejected, assessment was made on the former firm on Natabarlal Jayashankar in the status of an unregistered firm. Though a demand notice under S. 29 was issued in the name of the said unregistered firm, no tax, however, was paid. Accordingly, the ITO filed a certificate case being Case No. 235 of 1953 54 in the Court of the Certificate Officer, Cuttack, against the unregistered firm. The notice under S. 7 of the Bihar and Orissa Public Demands Recovery Act (4 of 1914) was only issued against the firm. But since the firm discontinued business firm March, 1949, the notices could not be served. The Certificate Officer at the instance of the ITO under S. 11 of Act 4 of 1914 substituted the names of the petitioners as partners of the firm appeared before the Certificate Officer and registered their objection amongst others on the following grounds:

(2.) THE sole contention of the petitioners was that the requisitioning officer (the ITO, Cuttack) had no jurisdiction to assess the petitioners in 1952, the unregistered firm having been discontinued in March, 1949, and accordingly the Certificate Officer had no jurisdiction whatsoever to realise the same from the petitioners. Before the Member, Board of Revenue, two contentions were raised :

(3.) MR . B. N. Mohanty, learned counsel for the petitioners, strongly relied upon a recent decision of the Calcutta High Court reported in R. N. Bose vs. Manindra Lal Goswami (1958) 33 ITR 435 (Cal) : TC 34R.819. That was a decision against the judgment of a single Judge (Sinha, J.) in Manindra Lal Goswami vs. ITO (1956) 30 ITR 550 (Cal) : TC 34R.820. The facts of that case were that the respondent Manindra Lal Goswami was one of the three partners of an unregistered firm carrying on business under the name and style of Dyes and Chemical Agency. The firm did business only from 1st April, 1940, upto 31st March, 1944. A notice of its dissolution was given to the IT Department on or about 14th Jan., 1947. The Department did not admit or deny receipt of the notice, but since it was seeking to justify the assessments an assessment on a dissolved firm, the question where notice of dissolution was or was not given was not material. It did not appear whether the firm had previously been assessed to income tax but towards the end of 1944, the ITO came to be of opinion that the firm's income for the asst. year 1943 44 had escaped assessment, and in that view issued a notice under S. 34 of the IT Act on 25th Nov., 1944, to the respondent describing him in the notice as "M. L. Goswami, Esqr., Partner of M/s. Dyes and Chemical Agency" and the income which had been discovered to have escaped assessment was described as "your income". The notice ended by requiring the respondent to deliver to the ITO by a certain date a return of "your total income and total world income assessable for the said year ending 31st March, 1944." A similar notice was also addressed to another partner of the firm, named B. R. Dasgupta, in almost similar terms, but no notice, however, was issued to the third partner, P. C. Mukherji. Notices were received by the respondent on 30th Nov., 1944, but he paid no heed to them. B. R. Dasgupta on the other hand, complied with the notice served on him and filed a return of the firm's income for the year concerned showing a loss of Rs. 1,189.