TMI Blog1959 (2) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... ee days from the receipt of the notice, the opposite party would be compelled to take suitable action against the petitioners including action under section 46(1) of the Income-tax Act. The notice was challenged originally in the writ petition on three grounds: The first ground was that this notice was illegal because section 44 of the Income-tax Act was not applicable, as the business of the assessee firm had not been discontinued but had been succeeded to by one of the partners Madan Behari Singhania. The second ground urged was that, since the provisions of section 44 of the Income-tax Act were not applicable, the tax could not be recovered from the petitioners, as there was no provision under the Income-tax Act authorising the Income-tax Officer to recover the tax from the petitioners when it was due from the firm. The third ground was that the Income-tax Officer had once agreed to realise the tax assessed on the firm from the partners in proportion to their shares, and thereafter he was not competent to recover the 'amount of tax of the share of partner from other partners. During the hearing of this petition, learned counsel for the petitioner moved an application for ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Mahabir Prasad v. Commissioner of Income-tax [1952] ITR 296 The same principle also follows from a decision of the Supreme Court in Janardan Reddy v. State of Hyderabad [1951] S.C.R. 344. In the latter case also, there was a judicial order in a criminal case by a Sessions Judge which had been affirmed by the High Court of Hyderabad before the Supreme Court became vested with jurisdiction over the area in which the case arose, i.e., Hyderabad. It was held by the Supreme Court that the judgment of the High Court, affirming the conviction and sentence upon the petitioners in that case, had acquired finality in the fullest sense of the term before 26th January, 1950, and, by reason of this finality, no one could question the validity of the convictions when the Constitution came into force. It Was held that the provisions of the Constitution, which were invoked, were not intended to operate retrospectively and therefore something which was legally good on the 25th January, 1950, could not be held to have become bad on the 26th January, 1950. The principle enunciated in that case applies to the case before us because the order of assessment of the Income-tax Officer, the validi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt make it clear that, if an order was passed before the Constitution came into force and had attained finality and it cannot subsequently be challenged before a court, the court cannot indirectly nullify the effect of that order by restraining action being taken in pursuance of that order. In the case before the Supreme Court, the petitioners were under detention in pursuance of the order which had become final, and the Supreme Court held that that detention could not be declared illegal without declaring the judicial order under which the petitioners were detained void, and thus indirectly making that judicial order ineffective. A similar principle was also laid down by a Full Bench of five judges in this court in Azmat Ullah v. Custodian, Evacuee Property, U.P. [1955] A.L.J. 521. In the present case before us also, what learned counsel for the petitioners desires is that we should restrain action in pursuance of the assessment order simply on the ground that that assessment order was a nullity, having been passed at a time when the firm, which appeared as the assessee in that order, had already been dissolved. Whatever be the reason for challenging the order, the order was a jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no information whether, when the assessment of the firm took place, notice of this proceeding was sent to all the partners or to only some of them. In fact there is no information available whether any notice was at all sent to these two petitioners even in their capacity as partners of the firm. For the purposes of this petition, therefore, we have to treat the order of assessment dated the 22nd November, 1949, as an order of assessment of the firm as a separate entity. As the tax assessed on the firm as an entity was clearly recoverable from the firm itself, the ordinary procedure was to issue a notice under section 29 of the Income-tax Act to the assessee firm, and, if that notice was not complied with, the Department could proceed against the firm in the manner laid down in the other provisions of the Act. This procedure cannot now be followed when the firm has admittedly ceased to exist. In these circumstances, it has been contended by Mr. Gopal Behari, learned advocate for the Department, that the Income-tax Department is entitled to enforce the assessment order against the partners of the erstwhile firm under section 44 of the Income-tax Act. In the alternative, it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r because of the provisions of the Indian Partnership Act, they would still come under the class of other persons liable to pay tax mentioned in section 29 of the Income-tax Act. Notice under section 29 issued to the firm cannot be treated as a notice issued under that provision to these petitioners, because, for the purposes of assessment and collection of tax, an unregistered firm under the Income-tax Act is treated as an entity separate from its partners. Of course, it may be that, for purpose of fixing the liability for tax, the provisions of the Partnership Act may be available or the liability may pass to the partners under section 44 of the Income-tax Act. In such cases, the partners would still not be covered by the word assessees as used in section 29 and proceedings against them would have to be taken on the basis that they were other persons liable to pay tax under the section. In this position, it was necessary that, before taking any proceedings for recovery, notices under section 29 should have been served on the petitioners. A notice under section 29 has to be in a prescribed form and has to be accompanied by an assessment form as laid down in the rules framed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng taken under the demand dated the 4th November, 1955, have to be restrained. When we took into consideration this aspect of the case, Mr. Gopal Behari learned counsel for the Department urged that no ground had been taken in this petition on this basis by the petitioner and therefore the court should not interfere on such a ground. In our opinion, this contention of Mr. Gopal Behari cannot be accepted. The petitioners no doubt challenged the validity of the notice dated the 4th November, 1955, on different grounds but those grounds are not being decided by us because we have found that under the Income-tax Act this notice, as it now stands, is not a valid notice and is unenforceable as such. What we are doing is to allow the petitioners' prayer for a writ to restrain the proceedings under this notice though on a ground different from those urged in the petition. The ground for our interference is based on facts appearing from the petition, the affidavit and the counter affidavit filed before us. Since the point on which we are deciding the case very simply disposes of the matter raised before us, we think that it is not necessary to decide the other questions of law raised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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