This is a petition to quash an order of the II-Additional Income-tax Officer, Virudhunagar, dated January 29, 1965, relating to the assessment year 1964-65 by which he assessed the petitioner, which is a firm, to income-tax. The point on which the petitioner seeks to quash the order is that the Income-tax Officer failed to apportion the profits of the firm as between its partners as reconstituted since the death of one of the partners on January 18, 1963. It is contended that this omission is fatal to the assessment order itself.
I am unable to accept this view of the scope of section 187 of the Income-tax Act, 1961. The main part of sub-section (1) of that section is to the effect 'where at the time of making an assessment under section 143 or section 144 it is found that a change has occurred in the constitution of a firm, the assessment shall be made on the firm as constituted at the time of making the assessment.'
That is what was done precisely in this case. The first proviso to this sub-section says that the income of the previous year shall, for the purpose of inclusion in the total income of the partner, be apportioned between the partners, who in such previous year, were entitled to receive the same. The second part of the proviso provides that if the tax assessed upon a partner cannot be recovered from him, it shall be recovered from the firm as constituted at the time of making the assessment. It is clear that while making an assessment under the main part of sub-section (1), the Income-tax Officer should apply the first proviso and apportion the income of the previous year relating to the firm between the partners entitled to receive the same in that year. But the omission to do so will not be reflected upon the validity of the order of assessment on the firm. That order is independently made on the firm and its validity does not depend upon the apportionment of the income as between the partners. The scheme of the section is that when the income is apportioned as between the partners, the tax assessed upon a partner will, in the first instance, be recovered from him and it is only when he fails to pay the tax or when it is not possible to recover from him that the liability of the firm to be proceeded against for the same will arise. But that is not to say that when an order is made against the firm, that cannot be enforced against the firm. If the firm is liable to pay the tax, it follows that the liability is also on each of the partners. It is true that the proviso contemplates that by following the apportionment of the income the liability to pay tax will be, in the first instance, on the partner so far as his share of the income is concerned. Nevertheless, I am of the view that the omission to make an apportionment will not have the effect of nullifying the validity of the order passed on the basis of sub-section (1) of section 187. No proviso can be read in a manner that will nullify the main provision.
It is argued that the partner will have no remedy under section 247 against an order of assessment determining his own total income or loss. But the petitioner before this court is not the partner but the firm itself. As and when the partner feels aggrieved as to apportionment, he can canvass the validity in such a form as may be open to him under the law.
The petition is dismissed.