Law:

Section:

Section 189 read with section 271(1)(c) of the Income-tax Act, 1961 [Corresponding to section 44, read with section 28(1)(c) of Indian Income-tax Act, 1922] - Firm - Assessment after dissolution - Assessment year 1947-48 - Whether section 44 of 1922 Act provides for joint and several liability of partners of a discontinued firm and for assessment and payment of tax - Held, yes - Whether section 28 of 1922 Act is attracted to assessment made under section 44 of 1922 Act - Held, yes Words and phrases : Words 'so far as may be' as occurring in section 44 of Indian Income-tax Act, 1922 FACTS. Assessee was partner in a firm, which discontinued business in December 1947. For the assessment year 1947-48, the ITO completed assessment making several additions and then levied penalty under section 28(1)(c). The amount of penalty was sought to be realised proportionately from all the partners. The assessee filed a writ contending that the ITO had no jurisdiction to impose a penalty on the partners of a dissolved firm and to collect the same from any one of them. The writ was dismissed. On writ appeal : HELD Section 44 in an abbreviated form provides for the joint and several liability of the partners of a discontinued firm and for the assessment and payment of the tax. But this section adds the following words, which are not present in section 25A. 'all the provisions of Chapter IV shall, so far as may be, apply to any such assessment'. Section 28 is one of the section in Chapter IV. It imposes a penalty for the concealment of income or the improper distribution of profits. The default made in furnishing a return of the total income, in complying with a notice under sub-section (4) of section 22 or sub-section (2) of section 23 and in concealing the particulars of income for deliberately furnishing inadequate particulars of such income are penalised under that section. The defaults enumerated therein relate to the process of assessment. Section 28, therefore, is a provision enacted for facilitating the proper assessment of taxable income and can properly be said to apply to an assessment made under Chapter IV. It was argued that a person can be penalised only if he had…

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