1984 (7) TMI 342

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ember, 1976. The firm had filed a return of turnover in form No. 4 prescribed under the Karnataka Sales Tax Act during the year 1974-75. The firm was dissolved with effect from 1st October, 1977. The assessing officer issued proposition notice to individual partner fixing the date of hearing on 22nd October, 1977. That notice was served on the petitioner on 25th October, 1977 and the other partner A. Mohammed on 17th October, 1977. Obviously the petitioner could not be heard on 22nd October, 1977. The other partner did not present himself for hearing. So there was an ex Parte assessment order on 31st October, 1977 estimating total and taxable turnover of Rs. 59,544 and Rs. 54,104.10 respectively with a levy of tax of Rs. 2,164. On 4th De....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... He, however, urged that after dissolution of the firm there is no relationship of agency as between the partners and therefore, individual notices ought to have been served on every partner before assessment. In support of the contention the learned counsel relied upon the decision of the Supreme Court in Income-tax Officer (Collection), Circle-I, Bangalore v. Mrs. A. Sattler [1973] 92 ITR 576 (SC). The decision of the Supreme Court in Mrs. Sattler's case [1973] 92 ITR 576 (SC) fully supports the contention urged by Mr. Srinivasan. There a dissolved firm was assessed after due notice to one partner but there was no notice to other partner. The Supreme Court held that such an order of assessment was not binding on the partner who has not b....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....the Legislature has enacted by section 44 that the assessment proceedings may be commenced and continued against a firm of which business is discontinued as if discontinuance has not taken place. It is enacted manifestly with a view to ensure continuity in the application of the machinery provided for assessment and imposition of tax liability notwithstanding discontinuance of the business of firms. By a fiction, the firm is deemed to continue after discontinuance for the purpose of assessment under Chapter IV." The above statement of law has been reiterated by the Supreme Court in Sri Raja Reddy Mallaram's case [1964] 51 ITR 285 (SC) with a further observation that a notice to the appropriate person would be sufficient to enable the autho....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he firm had taken place, and every person who was at the time of dissolution a partner of the firm and the legal representative of any such person who is deceased, shall be jointly and severally liable to pay the tax or penalty assessed or imposed. " The only difference that we notice between section 44 of the Income-tax Act, 1922 and section 15(2) of the Karnataka Sales Tax Act is that the provisions relating to the assessment are not expressly made applicable under section 15(2). But, in our opinion, it makes little difference, since there is no other provision prescribed for assessment of dissolved firms. Under rule 43(2) of the Sales Tax Rules the service of notice to one of the partners of the dissolved firm is held to be sufficient. ....