Law:

Section:

Income-tax Act (XI of 1922), Ss. 29 & 46(2) and Sales Tax Act (III of 1951), S. 12 Partnership-Certificated proceeding under S. 46 (2) of Act XI of 1922-Cannot be started, against person denying to be member of assessee-firm, without issuing him notices under S. 29 of Act XI of 1922 and under S. 12 of Act III of 195 I. Where certificate proceedings under section 46 (2), Income-tax Act were taken out against a person, who denied to be a member of the assessee-firm, without serving him a notice under section 29 of that Act and the corresponding section 12 of the Sales Tax Act, 1951 Held, the certificate proceedings started against the person in the 'absence of a notice duly served on him under section 29 of the Income-tax Act and section 12 of the Sales Tax Act were without lawful authority. It is an elementary principle of law that no person can be subjected to an obligation without affording him an opportunity to show cause. Similarly, an order favouring a person passed by a competent authority cannot be varied to his disadvantage without hearing him. In consonance with this principle section 29 provides that when any tax, penalty, or interest is due in consequence of any order passed under the Act, the Income-tax Officer shall serve upon the assessee or other person liable to pay such tax, penalty or interest a notice of demand in the prescribed form specifying the sum so payable. Failure to pay the amount can result in further penalty being imposed under section 46(1). An order under this subsection is appealable within 30 days. Valuable rights, therefore, accrue from the service of notice on the assessee or any other person' under section 29. It is true that the assessee' or `any other person' cannot challenge in these proceedings the correctness etc, of the assessment for which he has to move in separate proceedings under section 30, but certainly the person to whom notice is issued can show that he is not the assessee or `any other person' liable to pay tax, penalty or interest levied by the Income-tax Officer. The rule that notice served on the assessee-firm fulfils the requirement of section 29 vis-a-vis its partners has, no application to the case…

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