Law: Income Tax Act, 1961

Section: 156

(a) Income-tax----Recovery of tax---Firm=--Partner---Dissolution of registered firm---Notice of demand in the name of firm---Court holding that tax could not be recovered from partners---Subsequent notices of demand on partners---Recovery proceedings against partners valid. The assessee, a registered firm, way dissolved and proceedings for recovery of tax were initiated against the partners. The High Court quashed the proceedings on the ground that more existence of liability on the firm to pay tax was not sufficient to allow recovery of the same from the partners and that recovery proceedings would be valid only if the partners were treated as assessees in default. (b) Income-tax--- ----Res judicata---Scope of doctrine---Recovery proceedings quashed because notices had not been issued to partners---Subsequent issue of notices to partners---Judgment of Court does not bar recovery proceedings. Subsequently, notices were issued against the partners: On a writ petition to quash the recovery proceedings: Held, dismissing the writ petition that after the of the Court the defect pointed out by the Court had been rectified and notices had been issued against the partners under section 156 of the Income-tax Act, 1961. Hence, the of the Court did not operate as res judicata nor did it preclude the income-tax authorities from recovering the tax from the petitioner. Baladin Ram Kalwar. v. I.T.O. (1966) 62 ITR 392 (All.); Balchand (P.) v. TRO (1974) 95 ITR 321 (Mys.); Brij Ratan Lal Bhoop Kishore v. Additional CIT (1983) 139 ITR 906 (All.); Manohar Lai v. CIT (1988) 171 ITR 241 (All.) ref. JUDGMENT B. P. JEEVAN REDDY, C J.--This writ petition is filed for the issuance of a writ, order or direction declaring the notices dated April 8, 1988, March 25, 1988, and February 3, 1988, issued by the Tax Recovery Officer, Meerut (second respondent), under rules 31, 73 and 2 of the Second Schedule of the Income Tax Act, 1961, respectively. The firm Raghunandan Prasad Manohar Lal, consisting of four partners, was an assessee under the Act. For the assessment year 1981-82, a large amount of tax was determined to be payable by the firm. A notice under section 156 of the Act was issued…

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