ASHIM KUMAR BANERJEE, J. - (1.) MESSRS G. S. Atwal and Company (Asansol) was a partnership firm carrying on construction business at Asansol. One Surjit Singh Atwal was a partner of the said firm who retired from partnership with effect from December 31, 1961. The said firm, however, continued with the other partners as well as new incoming partners. In November 1965, one of the partners named Surinder Singh Atwal being appellant No. 2 made an application for disclosure of income before the income -tax authority and offered to pay tax on the said amount. It was disclosed in the said petition that the said income was for the assessment years 1958 -59 to 1961 -62 during the period when Surjit was a partner. The income -tax authority allowed the application by accepting such undisclosed income of Rs. 46.15 lakhs and assessed tax accordingly. The income -tax authority imposed the assessed tax accordingly amongst the partners including Surjit. When the order was served on Surjit, Surjit by letter dated May 12, 1969, informed the revenue that he did not get any benefit of the said sum of Rs. 46.15 lakhs. Since he had retired from the partnership long ago such assessment of tax upon him was illegal. He, however, contended that since he was saddled with the liability he should be given appropriate opportunity to pay the said sum by instalment. He also indicated in the said letter that his monthly income was Rs. 4,000 per month and as such it was not possible for him to meet such tax liability of the partnership firm. The income -tax authority thereafter asked the existing partners and the firm to discharge such liability. The firm along with its existing partners refused to pay the tax liability imposed upon Surjit. Series of correspondence were exchanged. Reminders were given from time to time. Even then the firm did not discharge such tax liability. Hence, the authority was compelled to attach the outstanding dues of the firm from the garnishee under Section 182(4) of the Income Tax Act, 1961, which gave rise to the present litigation. Pertinent to note, the firm at one point of time contended that the revenue could realise such arrear tax by attachment and sale of the landed properties belonging to Surjit. It, later on transpired that a suit was filed by the firm and its existing partners against Surjit for a declaration that the landed properties standing in the name of Surjit were nothing but benami of the partnership firm.
(2.) THE firm and its existing partners approached the learned single judge by filing the writ petition inter alia challenging the authority and propriety of the revenue in issuance of such order of attachment for realisation of the tax liability. Before the learned single judge Surjit also filed affidavit reiterating that he did not get any benefit of such alleged undisclosed income of Rs. 46.15 lakhs and such tax liability should be discharged by the firm itself and its existing partners.
(3.) THE learned single judge by his Lordship's judgment and order dated 22 -4 -2003, dismissed the writ petition inter alia holding as follows : (i) The partnership deed dated March 3, 1961, shows that the continuing partners took upon themselves the liability of the firm which included liability to sundry creditors amounting to the aforesaid sum of Rs. 46.15 lakhs. (ii) Respondent No. 5 was not liable according to the said deed of partnership to pay any part or portion of the aforesaid liability. (iii) Almost 5 years after retirement of respondent No. 5 the firm and the partners thereof disclosed before the department that the aforesaid liability was really an income and that the creditors were mere name -lenders. They, therefore, offered the aforesaid sum, stated to have been earned prior to 1960, for taxation which they proposed to pay in easy instalments over a period of 20 years. (iv) After conversion of liability into income respondent No. 5 became entitled to Mth share thereof because that was his share in the profits and losses of the firm at the relevant point of time. No evidence has been disclosed by the petitioners to show that any such payment was made to respondent No. 5. (v) However, acting on the aforesaid disclosure, tax was levied by the department against respondent No. 5. Later on upon realising their mistake the department sought to hold the firm liable for the liability apportioned against respondent No. 5. (vi) The order dated 11 -4 -1980, directing the firm to pay Rs. 7,49,488.54 was not objected to by the firm for almost 6 years. (vii) It is for non -payment of this sum that the attachment has been made. (viii) The firm has retained the benefit of the disclosure and wants respondent No. 5 to bear the liability of tax on that acccount. (ix) Granting any relief to the petitioners would mean unjustly enriching them. In the case of Mafatlal Industries Ltd. v. Union of India reported in : 1997(89)ELT247(SC) a nine -judge Bench of the Apex Court has held that 'power of the court is not meant to be exercised for unjustly enriching a person'. ;