Liability of Partners in Unregistered Firms for Income Tax; No Separate Notice Required

The court held that a separate notice of demand is not necessary against a partner of an unregistered firm for recovery of income-tax assessed against the firm. It was determined that the liability of a partner of an unregistered firm is not imposed by the Income-tax Act itself, and thus, a separate notice of demand is not required for recovery proceedings under section 46(2) of the Act. The court also found that the Collector could recover income-tax dues from the partner under section 46(2) of the Act, as partners are jointly and severally liable for the firm's liabilities. The appeal was dismissed, and the appellant was not entitled to a writ under article 226 of the Constitution.

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Issues:
1. Whether a separate notice of demand is necessary against a partner of an unregistered firm for recovery of income-tax assessed against the firm.
2. Whether the Collector can recover income-tax dues from a partner of an unregistered partnership firm under section 46(2) of the Income-tax Act.

Analysis:
1. The appellant contended that a separate notice under section 29 of the Income-tax Act was required before initiating recovery proceedings against him. However, the court held that the phrase "other person liable to pay" in section 29 should be construed as per the Income-tax Act, not the Partnership Act. The liability of a partner of an unregistered firm is not imposed by the Income-tax Act itself, and thus, a separate notice of demand is not necessary for recovery proceedings under section 46(2) of the Act.

2. The appellant argued that the Collector could not recover income-tax dues from him under section 46(2) of the Act. The court disagreed, citing section 25 of the Partnership Act, which holds partners jointly and severally liable for the firm's liabilities. Referring to Order XXI, rule 50 of the Civil Procedure Code, the court found that the Collector could execute the certificate against the appellant as a partner of the unregistered firm. Since the appellant did not dispute his partnership, the recovery proceedings against him were legally valid.

The court referenced decisions from the Calcutta High Court supporting its view and noted conflicting decisions from the Mysore and Allahabad High Courts. However, the court held that the latter decisions did not correctly interpret the law. Consequently, the appeal was dismissed, and the appellant was not entitled to a writ under article 226 of the Constitution.

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