P. Govindan Nair, J.
1. The question posed in this Original Petition for decision is whether assessments made an a Society, the Shrishaila Industrial and Spiritual Colony Charities, for the years 1950-51 to 1956-57 stylling the Society as an 'Association of persons' would impose any personal liability on the members of that Society to pay the tax imposed. The petitioners were members of the Society before 1-11-1957. The petitioners contend that there cannot be any personal liability to pay tax imposed on a Society since the members of the Society have no personal liability to discharge the debts of the Society. This Society has been registered under the Societies Registration Act, 1860, and it seems to me that Sections 6 and 8 of that Act reading as under are relevant:
'6. Every society registered under this Act may sue or be sued in the name of the president, chairman, or principal secretary, or trustees, as shall be determined by the rules and regulations of the society, and, in default of such determination, in the name of such person as shall be appointed by the governing body for the occasion:
Provided that it shall be competent for any person having a claim or demand against the society, to sue the president or chairman, or principal secretary or the trustees thereof, if on application to the governing body some other officer or person be not nominated to be the defendant.'
'8. If a judgment shall be recovered against the person or officer named on behalf of the society, such judgment shall not be put in force against the property, movable or immovable, or against the body of such person or officer, but against the property of the society.
Application for execution shall set forth the judgment, the fact of the party against whom it shall have been recovered haying sued or having been sued, as the case may be, on behalf of the society only, and shall require, to have the judgment enforced against the property of the society.'
By Section 6, the Society can either sue or be sued in the name of its president. Chairman, principal secretary or the trustees as shall be determined by the rules and regulations of the Society, and Section 8 says, that if a judgment shall 'be recovered against the person or officer named on behalf of the society, such judgment shall not be put in force against the property, movable or immovable, or against the body of such person or officer, but against the property of the society.
2. Section 14 of the Act is also of some assistance which provides that on dissolution, no member of the Society shall receive any profits. From these provisions in the statute, it appears to me to be clear that the members of a society are not personally liable for the debts of the Society. The Society is a legal entity. It is capable of suing and being sued as such. A tax imposed on a Society, though it has been styled as an 'Association of persons' is still a tax on the Society and not on its members. It is not possible, therefore, to say that the tax imposed on a Society is a tax imposed on the members of the Society.
3. But counsel on behalf of the Department invited my attention to Section 3 of the Indian Income-tax Act, 1922, and contended that the Income-tax law does not recognise a Society, that it only contemplates assessments on certain units -- the individual, the company, the undivided Hindu family, a firm and an Association of persons, -- and for the purpose of Income-tax law, I must consider only the 'Association of Persons' which is the status attributed to the Society under the various assessment orders. The argument is appealing, but it would, I think, amount to ignoring the provisions of the statute which has created the Society. That statute having negatived any personal liability on the part of the members even in the case of a judgment recovered against the Society, it is difficult for me to visualise that the Indian Income-tax Act purported to override these statutory provisions. There is no specific provision in the Indian Income-tax Act to that effect.
4. Section 44 of the Indian Income-tax Act gives an indication as to when the personal liability of the members of an association may arise. That arises on the discontinuance of the business of the association or firm or where an association of persons is dissolved. In this case, all the assessments, excepting the one for the year 1957-58, have been at a time when the petitioners before me were members of the Society. Admittedly the association of persons has not discontinued the business and there has been no dissolution. So the section cannot help the Department.
5. In regard to the year 1957-58, counsel on behalf of the Department contends that there has been a discontinuance of the business by those association of persons. This matter, however, has not been investigated by the Income-tax Officer who passed Ext. P-15 order. That order proceeds on the basis that the assessments for all the years in question stand on the same footing.
6. The above order was passed after the petitioners approached this Court once before in O. P. 835 of 1959. This Court then directed an investigation into the various points raised by the petitioners in Exts. P-13 and P-14, representations made by the petitioners before the Income-tax Officer. The Income-tax Officer said in the order. Ext. P-15.
'I have now to point out to you that the Society has been assessed to tax as an 'Association of Persons'. Law provides that the tax levied on an 'Association of Persons' can be recovered jointly and severally from the members of the 'Association'. You were a member of the Association during the accounting years in respect of which the tax has been levied. I have, therefore, to reject your petition and the taxes in arrears will be collected taking recourse to the provisions of Section 46 of the Indian Income-tax Act.'
What law has so provided has not been made clear and counsel for the Department has not been able to place before me any statutory provision which made the members of a Society liable for a tax imposed on the Society. In the absence of any specific provision, we have to find out whether there is any such liability under the general law. I am unable to find any. In fact, the provisions of the statute which has created this entity, specifically provides that no personal liability should be imposed on the members of the Society for judgments recovered against the Society.
7. In the light of the above, I quash Ex. P-15, but make it clear that it is open to the Income-tax Officer after giving a reasonable opportunity to the petitioners to have their case placed, to investigate the question regarding liability to the tax imposed on the Society for the year of assessment, 1957-58. I also direct the authorities to refrain from taking any steps pursuant to the orders of assessment passed on the Society and from collecting any tax imposed on the Society from the petitioners before me for the years upto 1957-58. There will be no order as to costs.