TMI Blog1967 (4) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... har Tent Factory, Agra, in partnership. There were four partners in the firm--Jawahar Lal Shiam Lal, Radha Raman and Radha Krishan. Jawahar Lal represented his Hindu undivided family and his share in the profit and loss was eight annas in a rupee. The share of other partners was two annas eight pies each. The firm was registered under section 26A of the Indian Income-tax Act, 1922, and tax was assessed on the income of the firm in accordance with section 23(5)(a) of the Act. The partnership was, according to the Income-tax Officer, dissolved on October 23, 1946. This appeal relates to the tax liability of Jawahar Lal in respect of the income from the firm for the assessment years 1944-45, 1945-46, 1946-47 and 1947-48. The tax attributabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed family and then applied that rate to the share of Jawahar Lal from the firm to determine the tax liability attributable to that share. Tax collected from Jawahar Lal was credited proportionately to the income under the two heads towards the tax liability so determined, and the tax liability of Jawahar Lal attributable to his share in the income was computed. The Income-tax Officer served Radha Krishan, respondent in this appeal, on October 3, 1962, with demand notices for the tax remaining unpaid by Jawahar Lal. Radha Krishan thereupon moved the High Court of Judicature at Allahabad for a writ of certiorari quashing the notices of demand and for an order directing the Income-tax Officer to withdraw the notices. Manchanda J. allowed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act is a unit of assessment ; and the income of the firm is computed as that of the unit irrespective of whether the firm is registered or unregistered. After the income of the firm is computed if the firm is registered under section 26A the share of each partner in the income of the firm is determined and is added to his other income and the total income so computed is brought to tax. If the firm is unregistered, the tax payable by the firm is, except when the Income-tax Officer otherwise directs in the interests of revenue, determined as in the case of any other entity, and demand for tax is made on the firm itself. The result is that, if the firm is registered, tax is collected from the partners individually and there is no l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly and severally enforced against the partners. Counsel also relied upon section 44 of the Income-tax Act, which, as it stood at the relevant time, read as follows : Where any business, profession or vocation carried on by a firm or association of persons has been discontinued, or where an association of persons is dissolved, every person who was at the time of such discontinuance or dissolution a partner of such firm or a member of such association shall, in respect of the income, profits and gains of the firm or association, be jointly and severally liable to assessment under Chapter IV and for the amount of tax payable and all the provisions of Chapter IV shall, so far as may be, apply to any such assessment. Section 44 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income of the business of a firm which is discontinued. When such an assessment is made, each member of the firm may be liable to pay jointly and severally tax payable by the firm. But when under the scheme of the Act tax is assessed individually against each partner, and no tax is made payable by the firm, the principle of joint and several liability under section 44 has no application. Counsel for the Commissioner said that this court had, if not expressly, tacitly, accepted the view that the liability of the partners of a firm to pay tax attributable to the share of each partner in the income of the firm is joint and several. Counsel relied upon the clause determining the tax payable by registered and unregistered firms respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act, before it was amended in 1956, in the case of a registered firm the tax payable by the firm itself was not required to be determined but the total income of each partner of the firm including therein the share of its income, profits and gains of the previous year was required to be assessed and the sum payable by him on the basis of such assessment was to be determined. But this was merely a method of collection of tax due from the firm. In S. V. Angidi Chettiar's case it was held that the Income-tax Officer has power to make an order under section 28 imposing penalty on a firm even after dissolution of the firm. There is nothing in the observations relied upon which indicates that under section 23(5)(a) when the income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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