Partner liability for firm tax dues exists, but coercive recovery needs a recovery certificate naming the individual partner.

A partner may be statutorily liable for the tax dues of the firm under the Income-tax Act, so the firm's tax liability is not confined to the firm alone. However, coercive recovery against an individual partner cannot be sustained where the recovery certificate is issued only in the firm's name and does not specifically authorise proceedings against that partner; the department must first obtain a proper certificate naming the person against whom recovery is sought.

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Issues: (i) Whether an individual partner can be made liable for the tax liability of a firm; (ii) whether recovery can be enforced against an individual partner on the strength of a tax recovery certificate issued only in the name of the firm.

Issue (i): Whether an individual partner can be made liable for the tax liability of a firm.

Analysis: Section 189(3) of the Income-tax Act, 1961 makes a partner liable to meet the tax liability of the firm. The statutory liability of the firm is thus not confined to the firm alone and extends to the partners.

Conclusion: Decided against the petitioner.

Issue (ii): Whether recovery can be enforced against an individual partner on the strength of a tax recovery certificate issued only in the name of the firm.

Analysis: A recovery certificate had been issued only against the firm, and not against the individual partner or partners. The certificate did not name the petitioner, yet the contemplated recovery would expose him to coercive process including civil prison. Such coercive recovery cannot be sustained against a person not named in the certificate.

Conclusion: Decided in favour of the petitioner.

Final Conclusion: The partner's substantive liability for the firm's tax dues was upheld, but recovery against the petitioner on the basis of a certificate issued only in the firm's name was disallowed, leaving the department free to proceed by issuing a proper certificate against the petitioner or the partners.

Ratio Decidendi: Although a partner may be liable for the tax dues of the firm, coercive recovery cannot be taken against an individual partner unless the recovery certificate specifically authorises proceedings against that person.

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