TMI Blog1964 (4) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... returns disclosed an income of ₹ 9144 and ₹ 5000 respectively for the two periods referred to above. For some reason, not discoverable in the record, the Income Tax Officer did not take up the assessment of the firm till the year 1953. Early that year, he called upon Kalyanasundara Nadar to file his wealth statement for three years prior to the date of return. There was no response to that requisition. The officer then informed Kalyanasundara Nadar of his intention to proceed against the firm under S. 23(4) of the Act; even then the latter did not move. On 11-3-1953, the Income Tax Officer completed the assessment fixing the business income of the firm at ₹ 2,00,000. Notice of demand for the tax was served on Kalyanasundara Nadir on 20-3-1953. 2. The Income Tax Officer, then took up the personal assessment of the other partner. A. D. Thiagaraja Pillai, (with whom we are concerned) and included in his individual assessment a half share of the business profits ascertained above, namely, ₹ 1,00,000. Notice of demand in respect of this assessment was served on Thiagaraja Pillai on 25-3-1953, a copy of the order of assessment on the firm was furnished to him o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doing business in arrack and toddy., should necessarily be regarded as an illegal one. Support of this contention was sought from Md. Abdul Kareem and Co. v. Commissioner of Income Tax, Madras (1948)2 MLJ 528 where a partnership between two persons, one who had taken a lease of an arrack shop and the other a toddy shop, to run the tow businesses for their joint benefit, was held to be illegal; and the firm was held liable to be assessed as an association of persons. In Velu Padayachi v. Sivasooriam Pillai, AIR 1950 Mad 44 Full Bench of this court declared that a partnership entered into for the purpose of conducting business in arrack or toddy on a license granted or to be granted to only one of them would be void ab initio and there would be no difference in the application of this principle whether the contract of partnership was entered into before the license was granted or afterwards. The underlying basis of this decision was that such a partnership would amount to a breach of the provisions contained S. 15 of the Abkari act. which would be punishable under S. 55 of that Act. Section 15 of the Abkari Act States: No liquor or intoxicating drug shall be sold without license ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular form for the Governmental permission. The question whether in a particular case a partnership firm for the purpose of doing Abkari business is legal or not will have therefore to depend on the facts of each case. 7. If, on the principles stated above, the partnership is found to be a legal one, an assessment to Income Tax can be made on it as a firm. If, on the contrary, it is found to be illegal, such assessment can only be made on the partners as an association of persons. The rule will be the same, continuance of the partnership or association of persons. There will be the same, whether the assessments to be dame during the continuance of the partnership or association of persons, or after its dissolution. In Commissioner of Income Tax Andhra Pradesh v. Raja Reddi Mallaram, [1964] 5 ITR 285 SC) the Supreme Court held that an order of assessment made subsequent to the dissolution of an association of persons, after serving a notice upon one of its members, in accordance with S. 63(2) o the Act, could be enforced against the other members who were not served. 8. The question, therefore, in each case will turn on its facts and it cannot be assumed as a matter or la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cancellation of the assessment under S. 27 of the Act except by an application filed within 30 days of notice to the party. This would be so even if the partnership had been dissolved. If, it were to be found that the partnership was illegal, then the assessment cold be made as on an association of person. Even to such a case, S. 44 of the Act would apply; such an association would be deemed to continue even after its dissolution, for the purpose of assessment, and the procedure for assessment, after dissolution, of income received prior thereto, would be the same as when it existed during the continuance of the association. Section 63(2) provides that notice under the Act in the case of an association of persons may be addressed to the principal officer thereof. Section 2(12) defined as principal officer thereof. In order to find out whether a notice served on one of the former mambas of an association of persons will bind another, it has to be seen whether the former was a principal officer, within the definition preferred to above. But it has not been ascertained in the present case whether Kalyanasundara Nadar, on whom notices relating to the assessment were served, was a prin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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