Income-tax---

----Recovery of tax---Writ---Firm---Partner---Arrears of tax due by firm which was defunct---Recovery proceedings against partner---Writ petition on the ground that petitioner was , not a partner---Finding that petitioner appeared before Settlement Commission as a partner---Writ petition was not maintainable---Indian Income Tax Act, 1961, S.220---Constitution of India, Art.226.

A notice was issued under sections 222 and 223 of the Income Tax Act, 1961, demanding a sum of Rs.3,91,829 being arrears of income-tax due from W. There was a further communication issued by the Tax Recovery Officer stating that since the firm was defunct, the petitioner and others were jointly and severally responsible to clear the arrears as partners of the defunct firm. It was also stated that coercive measures for recovering the arrears by attachment and sale of movable properties were proposed to be initiated. The petitioner was given an opportunity to pay the said amount. According to the petitioner, he was not a partner of the firm, W. On a writ petition against the recovery proceedings:

Held, dismissing the writ petition, that the W firm had filed an application before the Settlement Commission for settlement of its tax liabilities. In the proceedings before the Settlement Commission, the petitioner alongwith the Advocate appeared in his capacity as a partner. The said fact was evident from the copy of the proceedings. Hence, the contention taken by the petitioner in this original petition, that- he was not a partner of the firm, W, could not be sustained.

S.A. Nagendran with Premjit Nogendran acid Joy Thattil for petitioner.

P.K.R. Menon for Respondents.

JUDGMENT

The petitioner has filed this original petition for issuance of a writ of certiorari quashing Exhs. P-4 and P-6 notices issued by the second respondent, the Tax Recovery Officer Exh. P-4 is a notice issued under sections 222 and 223 of the Income Tax Act, 1961 demanding a sum of Rs.3,91,829 being arrears of income-tax due from Wynad Financing Corporation. Exh.P-6 is a further communication issued by the second respondent stating that since the firm is defunct, the petitioner and others are jointly and severally responsible to clear the arrears as partners of the defunct firm. It is also stated that coercive measures for recovering the arrears by attachment and sale of movable properties are proposed to be initiated. The petitioner was also given an opportunity to pay the said amount. According to the petitioner, he was not a partner of the firm. "Wynad Financing Corporation", who is the assessee in default. It is stated that the petitioner's wife was one of the partners, as could be seen from Exh.P-1 agreement. Learned counsel appearing for the petitioner submitted that since the -petitioner, is not a partner of the firm, which is now defunct, the second respondent has no authority to proceed against the petitioner for recovery of arrears of income-tax due from the defunct firm proposed in Exhs. P-4 and P-6 notices.

I have heard Sri P.K.R. Menon, learned senior Central Government standing counsel on behalf of the respondents. Learned senior counsel submitted that the firm, Wynad Financing Corporation, has filed an application before the Settlement Commission (IT and WT), Additional Bench, Madras, for settlement of its tax-liabilities and Exh.P-2 is the proceedings of the said Commission. Learned counsel further submitted that in the proceedings before the Settlement Commission the petitioner along with the Advocate appeared in his. capacity as a partner. The said fact is evident from the copy of the proceedings Exh.P-2 itself. Learned counsel has placed before me a photocopy of the said proceedings in which against serial number 6-present for the applicant, it is shown "Sri P.J. Jacob, Advocate, of Sri T.K. Narendran, partner". Learned senior counsel further submitted that in Exh.P-2 against column No.6 the name "Sri T.K. Narendran appears but the word 'partner' is omitted." Learned counsel also brought to my notice paragraph 3.1 of Exh.P-2 where the Settlement Commission in the context of grant of registration to the firm considered the question regarding the genuiness of the firm. In that context, the Settlement Commission observed as follows:

"Regarding the question of registration, we accept the Department's case that the firm is not genuine. It has been admitted in the statement of facts that there were only three persons who had organised abkari contract business under various names and they had taken their relatives as partners. They had neither introduced any capital nor received the profits as found from the seized books. Several other cases of this group were settled earlier by the Settlement Commissioner and in similar circumstances it was found that these firms were not genuine and the status of these firms was taken as unregistered firm (the applicant itself has mentioned the names of these firms and the settlement application number, etc., in the statement of facts). Accordingly, in this case also, the registration granted is cancelled and the status of the firm for the assessment yeas 1976-77, before us, will be taken as unregistered firm. "

From the above, it is clear that the contention taken by the petitioner in this original petition, that he is not a partner of the firm, Wynad Financing Corporation, cannot be sustained, though learned counsel appearing for the petitioner took me to the revised statement of facts and terms of settlement filed before the Settlement Commission (Exh.P-7 produced alongwith the additional affidavit, dated August 16, 1997). In view of Exh.P-2, I do not find any substance in the same. The amounts demanded In Exhs. P-4 and P-6 are the amounts settled as per Exh.P-2 and due from the said firm.

In view of what is stated above, I do not find any merit in this original petition. It is accordingly dismissed.

M.B.A./4073/FCPetition dismissed.