Law: Income Tax Act, 1922

Section: 46(2)

Law: Income Tax Act, 1922

Section: 46(2)

Section 222 of the Income-tax Act, 1961 [Corresponding to section 46(2) of the Indian Income-tax Act, 1922] - Recovery and collection of tax - Certificate proceedings - Assessment years 1954-55 and 1955-56 - Petitioner was a partner in a firm on which notice of demand was served - Subsequently, firm was dissolved and ITO was informed about same - Whether since no separate notice of demand had been served on petitioner individually, he could not be considered to be in default and no proceedings could be initiated against him for recovery of tax due of firm - Held, yes FACTS The petitioner was a partner in a firm which was assessed as an unregistered firm for the assessment years 1954-55 and 1955-56. The notices of demand for payment of tax were issued to and served on the firm on 31-8-1956. The firm discontinued its business with effect from 1-10-1956 and the firm had been dissolved and the fact dissolution had been brought to the notice of respondent ITO. The ITO issued a certificate under section 46(2) to the Dy. Commissioner. Pursuant to the aforesaid certificate the Dy. Commissioner initiated action for recovery of by attachment and sale of the immovable properties belonging to the family of the petitioner. Thereafter, a notice was served on the petitioner proposing to auction the immovable properties of the family of the petitioner, which, according to him, had been allotted to the share of his son under a partition effected on 18-4-1959. The petitioner had averred that no notice of demand had been served on him under section 29, and, therefore, he was not a defaulter and further, the certificate issued by ITO under section 46(2) of the 1922 Act did not authorize the recovery of the tax from the petitioner. On writ: HELD Recovery proceedings can be taken only in cases wherein an assessee is in default. No person can be deemed to be in default unless a notice of demand under section 29 has been duly served on him and is not complied with. 'In case of non-compliance with a notice of demand issued to an unregistered firm which is a separate assessable entity, a partner of the firm to whom no such notice has been issued cannot be considered an assessee in…

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