LexE. M. MUTHAPPA CHETTIAR versus THE INCOME-TAX OFFICER SPECIAL CIRCLE, COIMBATORE
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788
SUPREME COURT REPORTS
KM. MUTHAPPA CHETTIAR
v.
[1961]
THE I~;Clr'.fE-TAX. 0F.FICE!{, SPECIAL
CJRCLE, COIMBA'.lORE
(S. K. DAs, .M. Hm.u ATULLAli, K. C. DAs GuPTA,
J.C. SHAH and N. H.UAGOPALA AYYANGAR, JJ.)
.
Excess l'rofits 1'ax-Assesstnent by service of nnt~·ces on manag-
rng partner--Validity-lf bindi11g on ti" other partner-Tax. if can
be recovered by issue of cutijicaJe-E.<crss Profits Tax Act, I940
(XV of I940), ss. 8, IJ, 21-Indian Income-:ax Act, 1922 (XI of
I922), SS. 29, 44, 46(2).
The firm consisting of the appellant and another, carrying
on managing agency business, was on March 31, 1951, assessed
to excess profits tax for the year 1942 and the broken period from
January, 1943 to ~larch 4, 1943· The prescribed notices were
served not on the appellant but ori the other partnc= who, under
the terms oi the partnership deed, was the managing partner.
On March 4, 1943, the managing partner gave notice of dissolu-
tion of the firm and thereupon the appellant sued him for dis-
solution from such date as might be specified by the court. The
trial Court upheld the dissolution as and from the date notified
by the managing partner but on appeal the High Court by its
judgment rendered in 1953 fixed March 10, 1949· as the date of
the dissolution. An appeal taken to the Supreme Court from
this deci~ion of the High Court was still pending. The appellant
challengetl the validity of the order of assessment and the con-
sequent proceedings for recovery of the tax assessed, under
Art. 226 of the Constitution on the grounds, (a) that there was
a dissolution of the firm on March 4, 1943, and that notices
served thereafter on the managing partner would not hind
him, (b) that there was no demand of the tax due from him
under s. 29 of the Indian Income-tax Act and that, consequently,
the tax could not be recovered from him under s. 46(2) of the
Act, but the High Court dismissed his application.
Held, that the appellant could not be allowed to plead a
prior dissolution and .the assessment was binding on him.
Even ·assuming that the partnership stood dissolved on the
date of the assc5sment, his position would not be different.
Under the Excess Profits Tax Act, 1940, the unit of assessment
was not the firm but the business, and an order of assessment
passed after notice to the managing partner would be valid and
binding on the appellant under s. 44 of the Indian Income-tax
Act, 1922, as modified by the Central Board of Revenue under
s. 21 of the Excess Profits Tax Act, 1940.
A.G. Pandu Rao v. Collector of Madras, (1954) 26 I.T.R. 99 and
Bose v. Manindra Lal Goswami, (1957) 33 I.T.R. 435, approved.
1 S.C.R. SUPREME COURT REPORTS
789
.
No separate notice of demand under s. 29 of the Indian
1960
Income-tax Act, specifically addressed to the appellant, was
necessary in order to recover the tax by the mode prescribed by E. M. Muthappa
s. 46(2) of the Act. Under the proviso to s. 21 of the Excess
Chett.iar
Profits Tax Act, 1940, the appellant was an assessee within the
·v.
meaning of s. 29 of the Indian Income-tax Act, 1922, and the
The Income-tax
notice of demand served on the managing partner was notice to
Offim, Special
the appellant by virtue of s. 63 of the latter Act made applica- Cfrcle, Coimbatore
able bys. 21 of the former.
CIVIL APPELLATE
JURISDICTION:
Civil Appeal
Xo. 107 of 1956.
Appeal by special leave from the judgment and
order dated January 21, 1954, of the Madras High
Court in W. P. No. 498of1952.
With
Petition No. 130 of 1958.
Petition under Art. 32 of the Constitution of India
for the enforcement of Fundamental Rights.
M. R. M. Abdul Karim and K; R. Choudhri, for the
appellant (in C. A. No. 107/56) and Petitioner (In
Petn. 130/58).
K. N. Rajagopala Sastri and D. Gupta, for the res-.
pondents (in both the appeal a.nd petition).
1960. September 21.
The Judgment of the Court
was delivered by
AYYANGAR J.-Muthappa Chettiar, the appellant
Ayyangar ].
in Civil Appeal 107 of 1956 was sought to be proceed-
ed against for the recovery from him of Excess Profits
Tax assessed in respect of the business of Muthappa
& Co. of which he was a partner. He disputed the
legality of the recovery proceedings and filed Writ
Petition 498 of 1952 before the High Court of Madras
for the issue of a writ of prohibition for directing the
Income-Tax Officer, E. P. T. Circle, Madras, not to take
coercive steps against him for the recovery of the tax
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