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TMI Blog1979 (8) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ued notice under s. 263(1) of the Act dated July 3, 1970, addressed to the firm requiring it to show cause why the order directing registration be not cancelled. After heating the petitioner, the Addl. CIT by an order dated September 5, 1970, cancelled the registration of the firm for the assessment year 1968-69, and directed the ITO to reassess the tax payable by the firm treating it to be an unregistered firm. The firm filed an appeal to the Appellate Tribunal which was dismissed on April 6, 1972. It appears that in September, 1973, the TRO attached some house properties belonging to the partners. This was in pursuance of the recovery certificate dated March 16, 1972, forwarded by the ITO for realisation of Rs. 1,67,140 due from the firm. At this stage, the present writ petitions were filed to challenge the validity of the recovery certificate as well as the order of attachment. The principal question which requires our consideration is whether property belonging to a partner personally, can be attached and sold in proceedings for the recovery of tax in pursuance of a certificate naming the unregistered firm as the assessee. The certificate mentioned the firm, Brij Ratan Lal Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T. Act, 1961 ? Section 183 of the 1961 Act provides: " 183. Assessment of unregistered firms.-In the case of an unregistered firm, the Income-tax Officer (a) may determine the tax payable by the firm itself on the basis of the total income of the firm; or (b) if, in his opinion, the aggregate amount of the tax payable by the firm if it were assessed as a registered firm and the tax payable by the partners individually if the firm were so assessed would be greater than the aggregate amount of the tax payable by the firm under clause (a) and the tax which would be payable by the partners, individually, may proceed to make the assessment under sub-section (1) of section 182 as if the firm were a registered firm; and, where the procedure specified in this clause is applied to any unregistered firm, the provisions of sub-sections (2), (3) and (4) of section 182 shall apply thereto as they apply in relation to a registered firm." Under cl. (a), the unregistered firm itself can be assessed to tax. But under cl. (b), at the option of the ITO, the partners of such unregistered firm can also be assessed in the same manner and in accordance with the procedure prescribed for the reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , then, in such a case, the TRO has no jurisdiction to proceed to recover the arrears of tax from the partners of such unregistered firm personally. He cannot attach or sell their personal property and he cannot attempt realisation by arrest or detention of their person. Section 2(7) of the Act defines the word " assessee " to include every person who is deemed to be an assessee under any provision of this Act as well as every person who is deemed to be an assessee in default under any provision of this Act; but we have not been able to find any such provisions and the learned counsel for the Revenue was unable to indicate any provision which deems a partner of an unregistered firm to be an assessee though the unregistered firm may itself have been assessed ; or which deems a partner of an unregistered firm to be an assessee in default where the unregistered firm admittedly is the assessee in default. Sri Ashok Gupta, learned counsel for the Revenue, in his well prepared address to the court, invited our attention to the Supreme Court decision in Sahu Rajeshwar Nath v. ITO [1969] 72 ITR 617, in support of the proposition that arrears due from an unregistered firm can be recovered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oses of recovering an amount due under a decree. So 0. XXI, r. 50 of the CPC becomes inapplicable. There is no provision in Sch. II of the I.T. Act, 1961, comparable to r. 50 of 0. XXI of the CPC. Learned counsel for the Revenue invited oar attention to a decision of this court in Ram Das Jaiswal v. ITO[1971] 79 ITR 570(All). This was also a case under the 1922 Act and, for the reasons mentioned above, it is distinguishable. So is the case with E.P. Eapen v. ITO [1978] 112 ITR 829 (Ker). This too was a case under the old Act. For the Revenue, it was stressed that under sub-s. (3) of s. 189, the liability of every partner on dissolution of the firm is joint and several. The petitioners do not deny that in law they are jointly and severally liable to pay the income-tax arrears due from the unregistered firm, but they contend that the coercive methods for recovery cannot validly be utilised by the TRO against them. The jurisdiction of the TRO is confined to the rules contained in Sch. II. He cannot go beyond them. His function is to recover the arrears of tax in the manner prescribed by the rules of Sch. II. As already seen, they do not, unlike 0. XXI, r. 50, authorise him to recove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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