Law: Income Tax Act, 1922

Section: 26A,44,46

Income tax Act (XI of 1922), Ss. 26A, 44, 46 (before amendment in 1958) Registered firm Assessment of partners Failure of one partner to pay tax Recovery of arrears from another partner Whether permissible. The petitioner and one K were the partners of a firm. For the assessment year 1951 52 the Income tax Officer passed an order that as the firm was registered no tax was payable by it and that the share income of each partner would be considered in his individual assessment. The firm was dissolved and its business discontinued on June 21, 1952. The petitioner paid the tax due from him but a sum of Rs. 2,439 was due from K. On November 23, 1957, the Income tax Officer made a demand for that amount on the petitioner: Held (i) that section 44 of the Income tax Act (before amendment in 1958) did not apply since there was no assessment after the discontinuance of the firm ; (ii) that in the absence of an assessment of the firm either prior or subsequent to the discontinuance of the firm, there was no tax payable by the firm and the petitioner was not liable to pay the amount due from K ; (iii) that, therefore, the demand made on the petitioner to pay the amount due from K was liable to be quashed. Chengalvaroya Chettiar v. Commissioner of Income tax (1937) 5 I T R 70 ref. JUDGMENT M. S. MENON, J. The petitioner and one Krishnan entered into a partnership on the 15th April, 1949. The firm was registered under section 26A of the Indian Income tax Act, 1922. Exhibit P 3 dated June 5, 1952, is the assessment order in respect of the assessment year 195f 52. In that order the Income-tax Officer stated as follows; "As the firm is registered there is no tax payable by it. The share income of each partner will be considered in his individual assessment. No demand for 1951 52." The statement conformed to section 23(5)(a) of the Indian Income tax Act, 1922, which on the material date omitting the provisos thereto was in the following terms; "Notwithstanding anything contained in the foregoing subsections when the assessee is a firm and the total income of the firm has been assessed under subsection (1), subsection (3) or subsection (4), as the case may be, (a) in the case of…

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