P L D 1965 Dacca 21 (PLP)

All the respondents except the Bakijai Officer (respondent No. 4) opposed both the Rules by filing an affidavit‑in‑opposition in each case. The respondents do not deny the substance of the facts as alleged in the petitions, but they contend that the petitioner was a partner of the firm M/s. Syed Abdul Kaher & Co. and that the demand notice for income‑tax and the notice assessment for sales tax having been issued in the name of that firm `the petitioner' as a partner thereof is liable for the income‑tax and the sales tax assessed in the name of the firm. Mr. Ishtiaq Ahmed, learned counsel for the petitioner has urged the following points in support of the Rules: (1) That the petitioner was not a partner of the firm M/s. Syed Abdul Kaher & Co., and, as such, he is not liable to pay the income‑tax and the sales tax assessed in the name of the firm. (2) The Income‑tax Officer should have determined at the time of the assessment as to who were the partners of the said firm and this not having been done, it was not competent to the Income‑tax authorities to hold the petitioner to be a partner of that firm, subsequent to the order of assessment. (3) The petitioner was not served with any demand notice under section 29 of the Income‑tax, nor any notice of assessment of the sales tax was served on him under section 12 of the Sales Tax Act of 1948. In the absence of service of such a demand notice or a notice of assessment, no tax becomes payable and, as such the certificate proceedings for the recovery of the income‑tax and the sales tax, in so far as the petitioner is concerned, are illegal. As regards the first point, the admitted fact is that the order of the Income‑tax Officer holding the petitioner not to be a partner of the firm was revised by the Inspecting Assistant Commissioner on 9‑6‑

62. The competence of the Inspecting Assistant Com missioner to revise the order of the Income‑tax Officer is not disputed. It appears that the Inspecting Assistant Commissioner had power to revise the order of the Income‑tax Officer under section 34A (1) of the Income‑tax Act which runs thus:‑ "The Inspecting Assistant Commissioner may call for and examine the record of any proceeding under this Act and if he considers that any order passed therein by the Income‑tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making, or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment to be made." The order of the Inspecting Assistant Commissioner holding the petitioner and Syed Abdul Kaher jointly and severally liable for the tax as partners of the firm, though passed without giving any hearing to the petitioner, was appealable under section 33 of the Income‑tax Act within sixty days of the date of Communication of the order. The petitioner, instead of preferring an appeal to the Appellate Tribunal under section 33 against the said order, made a representation to the Commissioner of Income‑tax against that order on 29‑6‑62, that is, within the period of appeal. This representation, dated 29‑6‑62 appeared to have been entertained as a revisional application by the Commissioner of Income‑tax under section 33‑A, although no revisional application could lie within the period of appeal in view of the proviso (a) to sub section (1) of section 33‑A. Be that as it may, as the petitioner did not avail of the remedy in the proper form, namely, the appellate tribunal under section 33 against the order of the Inspecting Assistant Commissioner holding him to be a partner of the firm, A he cannot now agitate the same question under Article 98 of the Constitution. Moreover, whether or not the petitioner was a partner of the firm being a question of fact cannot be investigated at this stage. As regards the second point, Mr. Ishtiaq Ahmed submits that before making the assessment order, the Income‑tax Officer should have determined as to who were the partners of the firm, if it was a partnership at all. In support of this contention, he has cited the case of Gokuldas v. Kikabhai Abdulali and others (33 I T R 94). In the cited case, the learned Judges of the Bombay High Court, after examining various provisions of the Income‑tax Act, held that an Income‑tax Officer has an implied power to determine who the partners of an unregistered firm are. But, in that case, it does not appear to have been held that non‑determination of the partners of an unregistered firm before making the assessment in the name of the firm renders the assessment illegal. Mr. Ishtiaq Ahmed frankly concedes that the assessment in the name of an unregistered firm will not be invalid if the partners thereof are not determined by the Income‑tax Officer before or at the time of the assessment. It, therefore, follows that, even after the assessment has been made in the name of an unregistered firm, B it shall be competent to the income‑tax authorities as in the present case, to determine as to who are the partners of that firm. Coming now to the last point, it is admitted by the respondents that the demand notice under section 29 of the Income‑tax Act was issued in the name of the firm namely, M/s. Syed Abdul Kaher & Co. and that no notice under that section was issued to the petitioner as a partner of that firm. It is also admitted that notice of assessment of sales tax under section 12 of the Pakistan General Sales Tax Act, 1948, was issued in the name of the said firm and not in the name of the petitioner as a partner of that firm. Mr. Ishtiaq Ahmed strenuously urges that no notice of demand under section 29 of the Income‑tax Act and no notice of assessment of Sales Tax under section 12 of the Pakistan General Sales Tax Act having been issued to the petitioner, he cannot be said to have failed to pay the amount assessed as income‑tax and sales tax and cannot, therefore, be treated as an assessee in default with the result that the certificate proceedings initiated against the petitioner for the recovery of the income‑tax and Sales Tax are illegal. We think that there is much force in this contention. Section 29 of the Income‑tax Act runs thus: "When any tax, penalty or interest is due in consequence of any order passed under or in pursuance of this Act, the Income tax Officer shall serve upon the assessee or other person liable to pay such tax, penalty or interest a notice of demand in the prescribed form specifying the sum so payable." It appears from this section that the tax assessed under the Income‑tax Act including penalty and interest does not become payable until a notice of demand specifying the amount of the tax, penalty or interest is served on the assessee or other person liable to pay the same. This was the view taken by their Lordships of the Privy Council in the case of Doorga Prasad v. Secretary of State (AIR 1945 P C 62 p.64). In that case, their Lordships observed. "In their Lordships' opinion, although income‑tax may be popularly described as due for a certain year, it is not in law so due. It is calculated and assessed by reference to the income of the assessee for a given year, but it is due when demand is made under section 29 and section 45 It then becomes a debt due to the Crown, but not for any particular period." Mr. Ishtiaq Ahmed has cited the cases of Govindaswamy v. Income‑tax Officer (1960 P T D 526), Monindra Lal Goswami v. Income‑tax Officer. (30 I T R 550), B. Shah Mahmood v. Assistant Commissioner (47 I T R 55), in support of the same view. It is not necessary for us to[ discuss these cited cases, for, it is well settled that a tax or other sum of money payable under the Income‑tax Act does not fall due and become recoverable until a notice of demand has been served on the assessee or other person liable for it. In the present case, the notice of demand under Section 29 was served on the assessee firm but the income‑tax and penalty are sought to be recovered from the petitioner as a partner of that firm. No doubt, the petitioner having been found to be a partner of the assessee firm is liable to pay the tax and penalty as "other person" within the meaning of section

29. But, the amount of tax and penalty, so far as the petitioner is concerned, has not yet fallen due and become recoverable from him for the simple reason that no notice of demand under section 29 has been served on him so far. Consequently, the certificate proceedings for the recovery of income‑tax and penalty, so far as they relate to the petitioner, are unauthorized and unlawful. As regards sales tax, the petitioner's liability for it, if any, is to be decided having regard to the provision of section 12 of the Pakistan General Sales Tax Act, 1948 in spite of its repeal by the Sales Tax Act, 1951 (Central Act No. III of 1951). This is because of the saving provision of section 40 of the repealing Act. Section 12 of the Sales Tax Act of 1948 reads as follows: "12 (1) The Tax assessed under this Act shall be paid in such manner and in such instalments and within such time, not being less than fifteen days from the date of service of the notice of assessment, as may be specified in such notice. (2) In default of such payment a penalty not exceeding the tax remaining unpaid may be imposed and the total amount due including the penalty, if any, may be recovered as if it were an arrear of land revenue." Section 2 (2) of the said Act gives the definition of "assessee" as follows: "assessee" means a person by whom tax is payable under section 3 of this Act." Section 12, read with the definition of "assessee" in section 2 (12) means that the amount of the sales tax assessed and penalty imposed under that Act falls due and become recoverable as a public demand only after a notice of assessment has been served on the person by whom the same is payable of course, no authority has been cited with regard to the effect of non‑service of notice of assessment of sales tax on the person liable to pay it, but it appears to us from a reading of section 12 that the effect of non‑service of such notice is the same as that of non‑service of a demand notice under section 29 of the Income‑tax Act. In the present case, the notice for assessment of sales tax, like the demand notice for income‑tax, was served on the assessee firm Syed Abdul Kaher & Co., but not on the petitioner as a partner of that firm. For want of such notice, the amount of sales tax and penalty can not be said to have fallen due and become recoverable from the petitioner. Hence the certificate proceedings for the recovery of the sales tax and penalty, 'so far as they relate to the petitioner, are equally unauthorised and unlawful. Mr. Mesbahuddin, learned Adovcate for the respondents contends that when the notice of demand for income‑tax and the notice of assessment of sales tax were issued in the name of the assessee firm, the Collector, who has all the powers of a Civil Court for the purpose of recovery of the amounts due, can recover the same from the petitioner, a partner of the firm just as the Civil Court, can, in execution of a decree against a firm, realise the decretal amount from a partner individually. This argument is of no avail, because there is much difference between the liability of the partners of a firm under the Partnership Act and that of the partners for income‑tax and sales tax. Under the Partnership Act, partners, in the absence of any agreement to the contrary, are also liable to contribute to the liabilities o the firm. Moreover, under Order XXX of the Code of Civil Procedure, a decree against a firm is really a decree against al its partners. But this is not the case in respect of liabilities for income‑tax and sales tax, because the tax assessed under the Income‑tax Act or the Sales Tax Act does not become payable by a partner of a firm merely because he is a partner; the tax fall due and becomes payable by the partner only after the notice, required under the relevant taxing statute has been serve on him. Mr. Mesbahuddin then submits that the petitioner could have objected to the attachment of his properties under the relevant provision of the Public Demands Recovery Act, but this remedy not having been availed of, the petitioner is not entitled to any relief in these petitioners. This argument does not appear to be sound inasmuch as the certificate proceedings themselves, so far as they relate to the petitioner, are without any foundation, there being no public demand falling due from him. In the result, the petitions are allowed and the Rules made absolute. It is declared that the certificate proceedings in question, in so far as they relate to the petitioner, are illegal and of no legal effect. In the circumstances of the case, we do not make any order as to costs. HASAN, J.‑I agree. M. N. Petitions allowed.