Partners not liable for tax recovery where income-tax is assessed only on the firm under the Income-tax Act.

Income-tax liability must arise under the Act itself, and a registered firm assessed as such is treated as a separate assessee for assessment and recovery. A demand under section 156 and recovery under section 222 can be enforced only against the person on whom the Act fastens liability. The general rule of joint and several liability under the Partnership Act cannot be imported into the Income-tax Act without express provision or necessary implication. Partners of a firm are therefore not liable to be proceeded against for recovery of tax assessed only on the firm.

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Issues: Whether partners of a registered firm can be proceeded against for recovery of income-tax assessed on the firm under the Income-tax Act, 1961.

Analysis: The liability to pay income-tax is statutory and must arise under the Income-tax Act itself. A firm assessed as such is treated as a separate assessee for the purpose of assessment and recovery. The definition of "assessee" under the Act covers only a person liable under the Act, and a demand under section 156 followed by recovery proceedings under section 222 can be taken only against the assessee against whom liability is imposed by the Act. The general rule of joint and several liability under the Partnership Act cannot be imported into the Income-tax Act in the absence of an express provision or necessary implication. The earlier authorities relied upon by the revenue did not authorise recovery from partners where only the firm had been assessed and no separate liability had been created against the partners under the Act.

Conclusion: The partners of the firm are not liable to be proceeded against under the Income-tax Act, 1961 for recovery of tax assessed only on the firm.

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