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1987 Supreme(All) 549
HIGH COURT OF ALLAHABAD
R.M. SAHAI, OM PRAKASH, JJ.
Kamal Krishan Shukla - Appellant
Versus
Commissioner Of Income-Tax And Ors. - Respondent
Civil Misc. Writ Petition 318 of 1987
Decided on : Dec 07, 1987
Advocate appeared:
V.K. Upadhya
The receiver appointed for a different firm is not legally competent to receive notices, assessment orders, and demand notices on behalf of another firm, and the partners of a firm are deemed to be aware of the assessment proceedings if they have knowledge of the attachment of the property of one of the partners.
Headnote:
INCOME TAX - Assessment - Ex parte assessment - Service of notices - Receiver appointed for a firm - Whether receiver can receive notices, assessment orders, and demand notices on behalf of the firm - Whether partners of the firm were aware of the assessment proceedings - Whether petitioner's conduct disentitles him to equitable relief.
Fact of the Case:
The petitioner, a partner in a firm, challenged the ex parte assessment orders made by the Income-tax Officer for the assessment years 1963-64, 1964-65, and 1965-66. The petitioner contended that neither notices under Section 143(2) of the Income-tax Act, 1961, nor the assessment orders and demand notices were served on the partners of the firm, and therefore, no recovery proceeding could be pursued against the partners and their property.
Finding of the Court:
The court found that the receiver appointed by the civil court in 1966 for a different firm comprising of six partners was not legally competent to receive notices, assessment orders, and demand notices on behalf of the firm constituted under the deed dated October 11, 1962, for which the petitioner filed returns for the assessment years 1964-65 and 1965-66. However, the court also found that the partners of the firm were aware of the assessment proceedings right from the beginning, as the property of one of the partners was attached in 1969, and the petitioner and his co-partners had made sincere efforts to get the copies of the assessment orders and demand notices from the receiver.
Issues: 1. Whether the receiver appointed for a different firm was legally competent to receive notices, assessment orders, and demand notices on behalf of the firm for which the petitioner filed returns? 2. Whether the partners of the firm were aware of the assessment proceedings?
Ratio Decidendi: 1. The court held that the receiver appointed for a different firm was not legally competent to receive notices, assessment orders, and demand notices on behalf of the firm for which the petitioner filed returns, as the receiver had no concern with the business of that firm. 2. The court held that the partners of the firm were aware of the assessment proceedings right from the beginning, as the property of one of the partners was attached in 1969, and the petitioner and his co-partners had made sincere efforts to get the copies of the assessment orders and demand notices from the receiver.
Final Decision: The court dismissed the petition, holding that the petitioner's conduct disentitled him to equitable relief.
Om Prakash, J.
1. Prayer of the petitioner is that a writ in the nature of certiorari be issued for quashing the ex parte assessment orders, made by respondent No. 2 for the assessment years 1963-64, 1964-65 and 1965-66 on the firm, Badshah Pasand Karyalaya, and for quashing the proclamation dated March 24, 1987 (annexure 1 to the writ petition), for auctioning the house No. 74/110, Dhan Kutti, Kanpur, and that a writ be issued in the nature of mandamus directing the respondents not to proceed with the recovery on the basis of the ex parte assessment orders.
2. Brief facts are that one Laxmi Narain Shukla, who was engaged in the business of manufacture and sale of pan masala in the name Badshah Pasand Pan Masala, died on March 23, 1959, leaving behind his wife, Smt. Bitti Kunwar, his sons, Chunni Lal Shukla, Munna Lal Shukla and the petitioner. It is averred that after the death of Laxmi Narain Shukla, his son, namely, Chunni Lal Shukla, formed a partnership on March 23, (sic) 1959, which, purportedly, comprised six partners, viz., three sons of Laxmi Narain Shukla, his widow and two sons of Chunni Lal Shukla. Smt. Bitti Kunwar disputed the genuineness of the partnership deed of that firm and she averred that the partnership deed as well as Form No. 11 never bore her thumb impressions. It is averred that the petitioner started a separate business with his brother, Munna Lal Shukla, and mother, Smt. Bitti Kunwar, in 1961, in the name and style, Badshah Pasand Karyalaya. For such business, the petitioner filed a return for the assessment year 1963-64 in the status of a Hindu undivided family and returns for the assessment years 1964-65 and 1965-66 were filed on behalf of the firm, Badshah Pasand Karyalaya, which was constituted under the partnership deed dated October 11, 1962, by the petitioner, Munna Lal Shukla and Smt. Bitti Kunwar. In para. 6 of the petition, the averment is that Chunni Lal Shukla carried on a separate business in the same name and style in which the business was later carried on by the partnership firm constituted by the petitioner, Munna Lal Shukla and Smt. Bitti Kunwar. Chunni Lal Shukla, therefore, filed Suit No. 4 of 1963 in the civil court against the partners of the firm, Badshah Pasand Karyalaya, that the latter infringed the trade mark of the former's business and claimed a mandatory injunction against the partners that they be restrained from carrying on the business in the name and style in which the business was being carried on by Chunni Lal. In this civil suit, a receiver was appointed at the instance of Chunni Lal Shukla on May 21, 1966. It is said that the receiver had no concern with the business started under the partnership deed dated March 23, 1959, and October 11, 1962. The Income-tax Officer framed an assessment for the assessment year 1963-64 on March 19, 1968, pursuant to the return which was filed by the petitioner in the status of a Hindu undivided family and for the assessment years 1964-65 and 1965-66, the assessments had been made on December 11, 1970, pursuant to the returns which the petitioner filed in the name of the firm, Badshah Pasand Karyalaya. All the three assessments were, however, made in the status of an association of persons. The income-tax returns for all the three years were not accepted and the assessments had been made on larger amounts under Section 144 of the Income-tax Act, 1961 (for short, "the Act, 1961").
The receiver, who was appointed on May 21, 1966, filed returns for the years 1966-67 to 1970-71 and he also made an application under Section 146 of the Act, 1961, to set aside the ex parte assessment orders.
3. As the ex parte orders were not set aside, the Income-tax Officer issued recovery certificate to the Tax Recovery Officer, who attached house No. 74/110, Dhan Kutti, Kanpur, belonging to Smt. Bitti Kunwar, one of the partners of the firm, Badshah Pasand Karyalaya, vide order dated February 20, 1969, which was later set aside. The same prop
