Law: Income Tax Act (XI of 1922)

Section:

Income-tax Act (XI of 1922)----   ---- Ss. 29, 44 & 46-Unregistered firm - Dissolution - Assessment before coming into force of Constitution-Recovery from partners without service of notice of demand-High Court-Writ declaring proceedings invalid-Notice served on partners thereafter-Explanation that notices were issued in consequence of order of High Court-Effect-Mistake in dis cretion of partner's status-Deletion of preference in notice to right of appeal-Effect.   An order of assessment was passed in respect of an un registered firm for the assessment year 1944-45 on February 22, 1949. When proceedings for recovery of tax assessed on the firm were taken against the partners an application was made to the High Court for a writ and the proceedings were challenged on the ground that the firm had been dissolved before the date of assessment. The High Court held that the validity of the assessment order which was passed before the Constitution came into force could not be disputed in the writ proceedings but that proceedings for the recovery of the tax assessed on the unregistered firm could not be taken against the partners unless they had themselves been served with notices of demand under section 29 of the Income-tax Act, 1922. Thereafter the Income-tax Officer issued a notice of demand under section 29 in regard to the assessment on the firm and had it served on one of the partners, P, his status being shown as that of an unregistered firm. That paragraph of the notice which mentioned that an appeal may be preferred under section 30 to the Appellate Assistant Commissioner was scored out. With the notice of demand the Income-tax Officer had forwarded a letter mentioning that the notice was being sent in consequence of the order of the High Court in that writ petition. The partners again presented a writ petition to the High Court for a writ to quash the notice of demand served on P :   Held, (i) that the liability of the partners was directly traceable to the assessment on the firm, and the explanatory letter of the Income-tax Officer could not be considered as meaning that the notice was itself based on a liability created or imposed by…