| Case ID |
1f18ac1a-c5ec-41e6-a9d2-a2f6729896f2 |
| Body |
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| Case Number |
CIVIL WRIT No. 211-D OF 1963 |
| Decision Date |
Oct 13, 1972 |
| Hearing Date |
|
| Decision |
The case revolves around the tax liability of an unregistered partnership firm, where the Income Tax Officer (ITO) had raised a demand for the entire tax amount against one of the partners, Karam Singh Sobti. The court held that the liability of each partner in an unregistered firm is co-extensive, meaning that the entire tax due can be collected from any one partner. The ITO's attempt to apportion the tax liability was deemed to have no legal effect, as he lacked the authority to limit each partner's liability. Consequently, the court dismissed the writ petition, affirming that the petitioner was liable for the full amount due from the partnership, despite his earlier understanding that his responsibility was limited to 60% of the tax liability. |
| Summary |
This case addresses the complexities of tax liability within unregistered partnership firms under the Income-tax Act, 1961. The central issue was whether the Income Tax Officer could apportion tax liability between partners. The Delhi High Court ruled that partners in an unregistered firm are jointly and severally liable for taxes incurred. The petitioner, Karam Singh Sobti, contended that his liability should be limited to 60%, based on a previous communication from the ITO. However, the court clarified that such a limitation has no legal standing because the ITO does not possess the authority to divide tax responsibilities among partners in an unregistered firm. This ruling reinforces the principle that in unregistered partnerships, creditors can pursue any partner for the full amount of tax due, thereby emphasizing the need for clarity in partnership agreements regarding tax liabilities. The decision is significant in the context of tax law and partnership liabilities, establishing a precedent for future cases involving similar circumstances. |
| Court |
Delhi High Court
|
| Entities Involved |
Not available
|
| Judges |
DALIP K. KAPUR, J.
|
| Lawyers |
M.S. Vohra for the Petitioner,
B.N. Kirpal for the Respondents
|
| Petitioners |
Karam Singh Sobti
|
| Respondents |
H.S. Mumtaz
|
| Citations |
1973 SLD 746,
(1973) 92 ITR 35
|
| Other Citations |
ITO v. Radha Krishan [1967] 66 ITR 590
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
184
|