SETH HARISH CHANDRA Vs. UNION OF INDIA.

JUDGEMENT

(1.) THE only question for decision in this case is whether the present suit is barred by the provisions of section 67 of the Indian Income Tax Act, 1922. Messrs. Model Food Dehydrating Company, Shidipura, Delhi, admittedly an unregistered firm, was assessed to Income Tax for the assessment year 1942 -43 and 1943 -44 by the Income Tax authorities on 28th February, 1947, and 25th March, 1948, vide assessment orders exhibits D -1 and D -2, respectively. In these assessment orders Sohan Mal Golcha was shown as one of the partners of this firm. The tax due from this firm for these two assessment years was Rs. 1,34,486 -10 -0. All the partners of the firm being jointly and severally liable for this tax, the Income Tax Officer issued the recovery certificate asking the Special Assistant Collector, Delhi, to recover this amount from Sohan Mal Golcha. Thereupon, Sohan Mal Golcha filed the writ petition under article 226 of the Constitution of India challenging this recovery in the Punjab High Court at Simla, and the same was dismissed on 30th July, 1951. Thereafter, he moved the Supreme Court by a petition under article 32 of the Constitution of India, which was also dismissed on 11th November, 1952. After giving the required notice under section 80, Civil Procedure Code, the present suit was filed by him against the Union of India on 15th September, 1953, for a declaration that the plaintiff not being a partner of the assessee firm could not be proceeded against for the recovery of the tax. In this suit he also claimed an injunction restraining the defendant from demanding or recovering the said tax from him. In the alternative, declaration was claimed that the assessment and recovery proceedings, in so far as they affected him, were illegal, ultra vires, collusive and mala fide and were, consequently, ineffective and inoperative against him.

(2.) A preliminary objection was taken by the defendant that the suit was barred under the provisions of section 67 of the Indian Income Tax Act. This objection found favour with both the courts below and the suit was, consequently, dismissed. It may be mentioned that Sohan Mal Golcha died during the pendency of the litigation before the lower appellate court and his son, Harish Chander Golcha, was substituted in his place as his legal representative and he has filed the present second appeal in this court.

(3.) LEARNED counsel for the appellant strenuously urged that the present suit was not for setting aside or modifying any assessment made under this Act and was, therefore, not barred by the provisions of section 67 of the Act. He further submitted that the assessment orders passed by the Income Tax authorities were without jurisdiction so far as Sohan Mal Golcha was concerned, because (a) he was not served in his capacity as a partner of this firm with a notice under section 20(2)/34 of the Act since the same was sent to the firm care of him and, in fact, also he was not a partner of this firm, and (b) in any case, no assessment could be made one year beyond the date of the alleged service of this notice and such an assessment could not be called an assessment made under the Act. He also urged that no notice of demand under section 29 of the Income Tax Act having been served on the appellant, no recovery proceedings could have been taken against him. He also contended that the assessment orders passed by the Income Tax authorities were mala fide, fraudulent and collusive because Shri Bhagwan, one of the partners of the firm, had made misrepresentations to the Income Tax authorities and got these orders of assessment passed against the appellant fraudulently and as such the civil courts had jurisdiction to try the suit. For the determination of the question of the maintainability of the suit, only his allegations in the plaint had to be seen. Lastly, the leaned counsel submitted that the Hon'ble judges of the Supreme Court, while disposing of the writ petition, had observed that the proper remedy of the appellant was to file a regular suit. Section 67 lays down :