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Mahasukhrai Ramrichpal and ors. Vs. Tax Recovery Officer and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberCivil Rule No. 2792(W) of 1977
Judge
Reported in[1980]124ITR332(Cal)
ActsIncome Tax Act, 1961 - Section 182(4) - Schedule - Rule 11
AppellantMahasukhrai Ramrichpal and ors.
RespondentTax Recovery Officer and ors.
Appellant AdvocateSanjoy Bhattacharya and ;Phani Bh. Chakraborty, Advs.
Respondent AdvocateL.K. Chatterjee, Adv.
Excerpt:
- .....a prohibitory order by which the petitioner was directed not to make any payment to smt. panna debi agarwal or sri d. p. agarwal who retired from the partnership firm in 1975. certain bank accounts of the petitioner-firm were also attached. on june 9, 1977, such attachment was withdrawn on condition that the petitioner-firm should within two weeks from that date deposit with the registrar, a.s., of this court a sum of rs. 19,000 and further pay rs. 7,500, payable to smt. panna debi agarwal being the rent of the godown, to respondent no. 1, the tax recovery officer. it is stated by mr. chatterjee, appearing on behalf of respondent no. 1, that as the petitioner has deposited the amount with the registrar, a.s., of this court, the attachment order has since been withdrawn. 2. it appears.....
Judgment:

Amiya Kumar Mookerji, J.

1. This rule is directed against a prohibitory order by which the petitioner was directed not to make any payment to Smt. Panna Debi Agarwal or Sri D. P. Agarwal who retired from the partnership firm in 1975. Certain bank accounts of the petitioner-firm were also attached. On June 9, 1977, such attachment was withdrawn on condition that the petitioner-firm should within two weeks from that date deposit with the Registrar, A.S., of this court a sum of Rs. 19,000 and further pay Rs. 7,500, payable to Smt. Panna Debi Agarwal being the rent of the godown, to respondent No. 1, the Tax Recovery Officer. It is stated by Mr. Chatterjee, appearing on behalf of respondent No. 1, that as the petitioner has deposited the amount with the Registrar, A.S., of this court, the attachment order has since been withdrawn.

2. It appears that one D. P. Agarwal was a partner in the firm styled as M/s. Mahasukhrai Ramrichpal and he retired from the said firm with effect from April 4, 1971. An amount of Rs. 8,33,274.72 is due and payable by the said D. P. Agarwal as income-tax, penalty, etc., for the assessment years 1959-60 to 1971-72. The said tax was not paid by him. The petitioner filed an objection against the prohibitory order passed by the TRO as well as against an order of attachment of bank accounts, wherein it is stated, that at the time of retirement of the said D. P. Agarwal a sum of Rs. 28,558.75 as his share of profit up to the date of retirement wasfound due and payable by the said D. P. Agarwal to the firm. After adjustment of such share of profits, the amount due from him as aforesaid came down to Rs. 19,276.88. Taking into consideration his share of liability for the firm's tax up to his retirement, his debt to the firm stood at Rs. 27,157.28. There has, since then, been changes in the constitution of the firm from time to time. Smt. Panna Debi is the owner of several godowns at 17, 18 and 20, Bengal Coal Lane, and 79, Aluhatta, Seoraphuli, Hooghly, which are under the occupation of the petitioner as tenant for an aggregate annual rent of Rs. 7,500. The said Smt. Panna Debi is the wife of the aforesaid D. P. Agarwal. As D. P. Agarwal was unable to repay his liabilities to the firm, the petitioner did not make payment of the rent to the wife, as Smt. Panna Debi requested the petitioner to adjust the amount of such annual rent payable to her against the liability of her husband until the amount was fully repaid. Accordingly, in 1976, the petitioner adjusted a sum of Rs. 27/157.28, out of the sum of Rs. 29,949.77 then due to Smt. Panna Debi from the petitioner by way of rent against the dues of D. P. Agarwal. The TRO in his order dated May 9, 1977, came to the conclusion that the adjustments claimed to have been made was wrong and void since the income-tax demand would get preference over the claims as certificates under Section 222 were issued much before that. He was of opinion that a firm was to pay tax of a partner to the extent of 30% as contemplated under Section 182(4) of the I.T. Act, 1961, and, accordingly, he directed the petitioner-firm to pay Rs. 37,449.77 and 30% of the tax dues in accordance with the provisions of Section 182(4) of the I.T. Act, 1961, and he rejected the petitioner's objection filed under Rule 11 of the Second Schedule of the I.T. Act, 1961.

3. Mr. Bhattacharya, appearing on behalf of the petitioner, contended that the TRO had no authority or jurisdiction to realise the arrears of income-tax payable by the said D. P. Agarwal from the petitioner-firm. Mr. Chatterjee, appearing on behalf of the revenue, contended that under Rule 11 of the Second Schedule to the I.T. Act, 1961, the TRO was competent to investigate in order to find out 30% of the tax dues in terms of Section 182(4) of the I.T. Act, 1961. It appears that on June 28, 1977, the ITO, 'C' Ward, District-III(I), Calcutta, has issued a notice under Section 182(4) of the I.T. Act, 1961, directing the petitioner to show cause why the firm should not be required to pay a sum of Rs. 41,81.6.70 to the said ITO. In view of the fact that the proceedings had already been started by the ITO under Section 182(4) of the said Act, a similar proceeding before the TRO under Rule 11 of the Second Schedule cannot proceed. It appears from the notice itself that the ITO has already made the determination in terms of Section 182(4) of the Act. That being so, further investigation by the TRO becomes unnecessary. Accordingly, the orders passed by the TRO with respect tothe petitioner are quashed excepting that the petitioner shall pay to the TRO a sum of Rs. 7,500 being the rent of the godown payable to Smt. Panna Devi, wife of D. P. Agarwal, and the TRO is directed to grant a proper receipt for the said amount.

4. In the result, this rule is made absolute.

5. The petitioner shall be at liberty to withdraw the sum of Rs. 19,000 which has been deposited with the Registrar, A. S., of this court, in pursuance of the order of this court, on a proper application.

6. Let the operation of this order be stayed for a period of four weeks from date. This order, however, shall not prevent the petitioner from withdrawing the sum of Rs. 19,000.


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