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1984 Supreme(AP) 419
Andhra Pradesh High Court
Judges : A.RAGHUVIR, Y.V.ANJANEYULU
Commissioner of Income Tax - Appellant
Versus
Gangadhar Gowd Rama Gowd and Co. - Respondent
Decided On : 11-07-84
In the case of a dissolved partnership firm where each partner is jointly and severally liable for taxes, it is imperative that each partner is served with the orders passed. If a partner is not served, he is entitled to file an appeal after obtaining certified copies, and the limitation period should be reckoned from the date of service of the copies on him.
Headnote:
INCOME TAX - REGISTRATION OF FIRM - SERVICE OF ORDER - LIMITATION - APPEAL - PARTNERSHIP FIRM DISSOLVED - SERVICE OF ORDER ON ONE PARTNER - OTHER PARTNER NOT INFORMED - APPEAL BY OTHER PARTNER AFTER OBTAINING COPIES OF ORDER - LIMITATION TO BE RECKONED FROM DATE OF SERVICE OF COPIES ON HIM - REGISTRATION OF SUB-PARTNERSHIP FIRM - PERMISSIBLE.
Fact of the Case:
The assessee, a sub-partnership firm, was denied registration by the Income-tax Officer for the assessment years 1967-68, 1968-69, and 1969-70. The orders were served on one of the partners, Gangadhar Gowd, who did not take any action. Later, the Tax Recovery Officer attached the properties of another partner, Ganga Gowd, and seized cash from his premises. Ganga Gowd obtained certified copies of the orders and filed appeals against the denial of registration. The Appellate Assistant Commissioner admitted the appeals and allowed the registration. The Income-tax Officer appealed to the Tribunal, which upheld the Appellate Assistant Commissioner's decision.
Finding of the Court:
The court held that, in the case of a dissolved partnership firm where each partner is jointly and severally liable for taxes, it is imperative that each partner is served with the orders passed. Since Ganga Gowd was not served with the orders, he was entitled to file an appeal after obtaining certified copies, and the limitation period should be reckoned from the date of service of the copies on him. The court also held that the question of whether registration can be granted to a sub-partnership firm had been settled by a previous decision of the court, which allowed such registration.
Issues: 1. Whether the appeals filed before the Appellate Assistant Commissioner were within time for the relevant assessment years 1967-68, 1968-69, and 1969-70? 2. Whether the assessee-firm is entitled to the benefit of registration for the assessment years 1967-68, 1968-69, and 1969-70?
Ratio Decidendi: 1. The court held that, in the case of a dissolved partnership firm where each partner is jointly and severally liable for taxes, it is imperative that each partner is served with the orders passed. Since Ganga Gowd was not served with the orders, he was entitled to file an appeal after obtaining certified copies, and the limitation period should be reckoned from the date of service of the copies on him. 2. The court held that the question of whether registration can be granted to a sub-partnership firm had been settled by a previous decision of the court, which allowed such registration.
Final Decision: The court answered both questions in the affirmative, in favor of the assessee and against the Revenue. The appeals filed before the Appellate Assistant Commissioner were held to be within time, and the assessee-firm was held to be entitled to the benefit of registration for the assessment years 1967-68, 1968-69, and 1969-70.
( 1 ) THIS reference arises under section 256 (1) of the Income-tax Act, 1961, for the assessment years 1967-68, 1968-69 and 1969-70. The assessee is a sub-partnership firm carrying on business in excise contracts. For these assessment years, the Income-tax Officer rejected the assessees claim for registration of the partnership firm. The connected orders were served on one of the partners by name Gangadhar Gowd. It appears, the partnership firm was dissolved and the orders in question were served on the above mentioned Gangadhar Gowd. The said Gangadhar Gowd did not take any action to appeal against the order of the Income-tax Officer refusing the registration of the firm. In course of time, the Income-tax Officer initiated proceedings for recovery of the tax due from the partnership firm and in the course of such proceedings, the Tax Recovery Officer attached the immovable properties of another partner by name Ganga Gowd and also seized a sum of Rs. 20,000 from his premises. At that stage, Gangadhar Gowd seems to have made enquiries about the reasons for attachment of properties and seizure of cash by the Tax Recovery Officer. He was informed that the tax recovery proceedings were pursuant to the demand raised by the Income-tax Officer refusing the registration of the firm, orders concerning which were served on the partner Gangadhar Gowd. Thereupon Ganga Gowd made an application for certified copies of the orders passed by the Income-tax Officer and obtained the same. After obtaining the certified copies, he filed appeals against the order refusing registration. The Appellate Assistant Commissioner admitted the appeals and allowed the assessees claim for registration of the firm. The Income-tax Officer filed appeals against the orders of the Appellate Assistant Commissioner. The contentions taken in the appeal by the Income-tax Officer were that the Appellate Assistant Commissioner ought not to have entertained the appeals filed by Ganga Gowd as the appeals were barred by limitation if the date of service of the orders on partner Gangadhar Gowd is taken into account and that, in any event, the assessee-firm was not entitled to claim registration. The Tribunal rejected the appeals filed by the Income-tax Officer. Thereupon the Commissioner of Income-tax applied for and obtained the present reference. The Income-tax Appellate Tribunal referred the following two questions of law for the opinion of this court under section 256 (1) of the Income-tax Act, 1961 :"1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the appeals filed before the Appellate Assistant Commissioner were within time for the relevant assessment years 1967-68, 1968-69 and 1969-70 ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the assessee-firm is entitled to the benefit of registration for the assessment years 1967-68, 1968-69 and 1969-70 ?"
( 2 ) IT is not in dispute that the partnership was dissolved and after such dissolution, the Income-tax Officer served the orders refusing the registration to the firm on one of the partners by name Gangadhar Gowd. Apparently, he did not take any action and when the properties of (another partner) Ganga Gowd were sought to be attached, he pleaded total unawareness of the orders passed by the Income-tax Officer and obtained copies of the orders passed and duly filed an appeal. In our opinion, for purposes of limitation it is not permissible, in the facts and circumstances of this case, to take into account the date of service of the order on Gangadhar Gowd. In the case of a partnership firm which is dissolved, wherein each one of the partners is made liable for payment of taxes on joint and several liability, it is imperative that each one of the partners is put on notice about the orders passed. In the present case, it is admitted that no orders were served on Ganga
