TMI Blog1979 (1) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... aid firm had agency business from the most leading and reputed companies of national and international importance. The firm had agencies in cement, automobiles, automobile spare parts, cigarettes, hydrogenated oil, confectionery, iron, batteries, etc. The firm had a large turnover of as much as about Rs. 1,00,00,000 (Rs. one crore) in Kutch. The said firm was holding the agencies from the following companies : 1. M/s. Jhonson Company. 2. Western India Match Company, Bombay. 3. Premier Automobiles, Bombay. 4. Cement Marketing Company, Bombay. 5. Hindustan Lever Ltd., Bombay. 6. Imperial Tobacco Co., Ahmedabad. 7. Imperial Chemical Industries, Bombay. 8. M/s. Perry Company, Bombay. 9. Good Year Tyre Rubber Co., Bombay. 10. Firestone Rubber Co., Bombay. 11. Vulcan Trading Co., Bombay. 12. Shalimar Biscuit Co., Bombay. 13. Asbestos Cement Co., Bombay. 14. Caltex India Co., Bombay. 15. F. Taxik Co, Bombay. 16. National Carbon Co., Bombay. The said firm was assessed on the best judgment assessment for assessment years 1959-60 to 1961-62 and income for each year was estimated at Rs. 4,00,000. It appears that for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r which the petitioner was to be treated as successor to the firm, (4) deed of dissolution of the firm, (5) particulars of the business alleged to be succeeded by the petitioner, and (6) copies of the assessment order of the petitioner. The respondent by his letter of January 11, 1974, informed the petitioner that copies of the assessment orders of the firm could not be furnished since they related to third party, and that the petitioner need not be furnished with the deed of dissolution of the firm for the same reason. As regards the particulars of the business, the respondent stated that these were very much within the knowledge of the petitioner. The respondent gave particulars about the tax in arrears as required by the petitioner. At this stage, the petitioner has moved this court for appropriate writ, order or direction to quash and set aside the impugned notice and to prevent the respondent from proceeding further in pursuance thereof. On rule nisi being issued by this court, Mr. I. P. Patel, ITO, Ward " A ", Bhuj, who has jurisdiction to proceed further in the matter, has filed the affidavit-in-reply resisting the petition. The main contentions on which this petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch business or profession for the previous year in which the succession took place up to the date of succession or for the previous year preceding that year, assessed on the predecessor, cannot be recovered from him, the Income-tax Officer shall record a finding to that effect and the sum payable by the predecessor shall thereafter be payable by and recoverable from the successor, and the successor shall be entitled to recover from the predecessor any sum so paid. " It is, therefore, with a view to recover the tax dues in arrears of the partners of the aforesaid firm that the respondent has initiated the present proceedings. None the less, the relevant question, which would arise in the first instance for the exercise of the jurisdiction under sub-s. (3) is, whether there was any succession to the business of said firm ? It should be recalled that the said firm had agencies from different companies of repute and importance. The said firm was not merely a wholesaler or a retail dealer but pre-eminently was carrying on agency business from the different companies producing consumer goods. The term " succession to business " has a recognized connotation. It involves change of owners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner was called upon for the first time by the impugned notice of December 10, 1973, to show cause why he should not be treated as successor in business of the said firm of M/s. Kalyanji Dhanji Co. One of the partners is erstwhile insolvent in Insolvency Petition No. 4 of 1964 by the order of insolvency court of March 8, 1966, and he was given discharge by the insolvency court by an order of January 19, 1968. Another partner, Vishanji Kalyanji Shah, was adjudged insolvent by the High Court of Bombay on June 18, 1963, and had been granted discharge with effect from February 19, 1965. If the firm went into losses, stopped its business and the partners were declared insolvent as far back as in 1965-66, and given discharge in 1965 or 1966, how can that business be succeeded to by the petitioner ? In spite of the best efforts of the petitioner to solicit the relevant information from the respondent as to when the business of the firm came to a standstill and the date when he succeeded, the respondent tried to put off by giving a vague and evasive reply that this information was within the knowledge of the petitioner. To say the least, this is a formal and an empty way of compli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India and the petitioner. Even assuming that the petitioner undertook to satisfy the liability of the firm at the instance and bidding of the firm, or for that matter as a result of some understanding between the firm and the petitioner, it cannot be said that there was succession to the business of the firm by the petitioner since the firm's business was not merely the agency in cement from the Cement Marketing Company of India but was a business of agencies of different companies in different commodities. The said circumstance, therefore, in our opinion, is entirely an innocuous circumstance which cannot afford any basis either singly or coupled with the other two circumstances which we will discuss shortly to confer jurisdiction for initiation of the proceedings. The second circumstance that the petitioner had taken over some stock of the firm is so vague, imprecise and uncertain that it would not justify the respondent to exercise his jurisdiction under s. 170. Apart from the particulars of the items of stock taken over and the value thereof, the real question is, whether there is any material from which it can be suggested that there was an identity and continuity of busine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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