Law:

Section:

Section 222, read with section 177 of the Income-tax Act, 1961 - (Corresponding to section 46(2), read with section 44 of the Indian Income-tax Act, 1922) - Collection and recovery of tax - Certificate proceedings - Assessment years 1947-48 to 1949-50 - Petitioners were partners in a firm which discontinued its business since March, 1949 - Firm was assessed for assessment years in question in status of unregistered firm - Despite service of demand notice firm did not pay tax - Accordingly, ITO started certificate proceedings against firm and issued demand notice - However, since firm discontinued business from March, 1949 notices could not be served - Thereafter, names of petitioners were substituted as partners of firm in exercise of powers under section 11 of Bihar and Orissa Public Demands Recovery Act, 1914 and notices were issued to petitioners - Whether certificate officer was well within his jurisdiction to substitute partners of unregistered firm and to proceed against them, since they were jointly and severally liable for income-tax dues under section 44 of 1922 Act - Held, yes - Whether since quantum and legality of assessment was not challenged by petitioners, ITO was within his jurisdiction to proceed to realise arrears of tax under section 46(2), read with section 44 of 1922 Act - Held, yes FACTS One N along with the petitioners carried on a partnership business. The partnership worked for three years, that was from September, 1946, to March, 1949. The assessment of the firm for the assessment years 1947-48 to 1949-50 were completed in the status of an unregistered firm. Though a demand notice was issued in the name of the said unregistered firm, no tax, however, was paid. Accordingly, the ITO filed a certificate case, against the unregistered firm. The notice under section 7 of the Bihar and Orissa Public Demands Recovery Act 1914 was only issued against the firm. But since the firm discontinued business from March, 1949, the notices could not be served. The Certificate Officer at the instance of the ITO under section 11 of the 1914 Act substituted the names of the petitioners as partners of the aforesaid firm and again issued notice under section…

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