Shri Nand Lal vs Tax Recovery Officer and Another

The petitioner-partner of the assessee-firm, Messrs. Nand Lal and Company, impugned the competency of the Tax Recovery Officer to recover from him the tax and penalty amounting to Rs. 1,48,496 due from the assessee-firm for the assessment year 1971-72, vide Certificate No. 539, dated March 31, 1977, through Civil Writ No. 1944 of 1981.

Before the court two contentions were raised : (1) that the tax liability was against the firm and that the individual partner could not be made liable, and (2) that the tax recovery certificate was issued against the firm and in pursuance thereof the amount of tax mentioned therein could not be realised from the individual partner. The Bench, in view of Section 189(3) of the Income Tax Act, repelled the first contention holding that the individual partner was liable to meet the tax liability of the firm. However, the second contention prevailed with the Bench and it was observed that the tax recovery certificate had been issued only against the firm and not against the individual partner or partners of the firm and, therefore, in pursuance of the certificate, the tax in question could not be recovered from the individual partner. The Bench, however, made it clear that it was open to the Department to issue such a certificate against the partner or his co-partners for making the impugned recovery. The Income Tax Officer concerned issued a fresh recovery Certificate No. 417 dated November 12, 1981, to the Tax Recovery Officer who issued a notice, annexure P-4, dated November 16, 1981, to the petitioner. In that tax recovery certificate, besides the name of the firm, the name of the petitioner was also mentioned, the exact description being M/s. Nand Lal & Co..... through Shri Nand Lal, petitioner herein. It is this certificate of recovery and the notice issued by the Tax Recovery Officer, annexure P-4, that have been impugned by the petitioner in the present writ petition.

Learned counsel for the petitioner has urged two contentions, (1) that the action was beyond limitation, and (2) that the individual partner was not liable to clear the tax liability of the firm. In support of his second contention, he has placed reliance on S.N. Santhalingam Vs. Income Tax Officer, Central Circle-II, Bangalore and Another, and Tax Recovery Officer, Bangalore Vs. P. Balchand, .

As for the second contention, it may be observed that this very submission was declined by the Division Bench in its earlier judgment which is annexure P-3 to the writ petition.

The decisions relied upon by learned counsel for the petitioner are of no help to him. These decisions relate to a point which had been successfully pressed before the Bench in the earlier writ petition. These decisions turn on the question as to whether the individual partner''s name is mentioned in the recovery certificate or not. In both the cases, only the name of the firm was mentioned and not of the individual partners. Such is not the case in the present writ petition. In the present certificate, not only the name of the firm is mentioned, but the name of the petitioner-partner is also mentioned.

As to the question of limitation, it may be observed that the tax recovery is of the firm. Certificate No. 539, dated March 31, 1977, had been issued against the firm very much in time and the present action is only the continuation of that action.

For the reasons aforementioned, there is no merit in this writ petition and the same is dismissed in limine.