TITY THOMAS Vs. TAX RECOVERY OFFICER
HIGH COURT OF KERALA
TAX RECOVERY OFFICER
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(1.)The petitioners, eight in number, were partners of a firm M/s.Gemini Plantations, which owns coffee plantations in this State. This partnership, constituted over a decade and a half ago, has been undergoing reconstructions from time to time, with partners retiring and new partners being inducted. The specific details of these retirements and inductions are unnecessary for the purpose of this case, except to mention that the petitioners were partners of the firm during the financial years ending March 31, 1981 and March 31, 1982.
(2.)The firm had been granted registration under S.184 of the Income Tax Act, 1961 (the Act). Assessments Exts.P4 and P5 were completed on March 13, 1986 holding that the firm had no income assessable to tax under the Act. These orders were however reopened and fresh orders Exts.P8 and P9 passed on August 14, 1987 assessing the firm to tax on the capital gains arising consequent on the sale of certain trees in its plantations. There were consequent demands for Rs.2,94,590/- by way of tax and other amounts for the assessment year 1981-82, and Rs.1,54,313/- for the year 1982-83. The assessments were made on the firm and the demand notices Exts.P10 and P11 were also addressed to the firm. The amounts demanded remained unpaid, whereupon the Tax Recovery Officer issued Ext. P7 series of notices dated November 23, 1992 to the petitioners, under S.188A of the Act, calling upon each of the petitioners to pay 1/18 of the arrears due, as their share thereof. This writ petition is filed challenging the notices Ext. P7 series with the contention that the assessment and the demand being on the firm (which continued to be in existence), the partners could not be proceeded against personally for recovery of the amount due. S.188A which was introduced in the Act with effect from April 1, 1989 by the Direct Tax Laws (Amendment) Act 1987 has no retrospective operation and is insufficient to sustain the proceedings against the partners for recovery of the amounts due under Exts.P8 and P9.
(3.)Counsel for the petitioner placed reliance on the decision of a Full Bench of this Court in Income Tax Officer v. C.V. George, 1976 KLT 333 and Alikoya Haji v. Assistant Commissioner of Sales Tax, 1976 KLT 762 to contend that the tax demanded from the firm could not be recovered from the petitioners. There is also a secondary submission that the order of re-assessment was one completed in violation of the principles of natural justice, without notice to the petitioners, and therefore not enforceable as against them. Reliance is placed on the decision in Govinda Prabhu v. Additional Sales Tax Officer, 1984 KLT (Short Notes) Case No.92.
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