Dharmen Rameshchandra Shah … v. The Income Tax Officer, Ward 25(1)(1), Mumbai And Another …

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONWRIT PETITION NO.372 OF 2020 Dharmen Rameshchandra Shah…PetitionerVs.The Income Tax officer, Ward 25(1)(1), Mumbaiand another…Respondents Mr. Mihir Naniwadekar a/w. Ms Farzeen Khambatta for Petitioner.Mr. Sham Walve for Respondent No.1. CORAM : UJJAL BHUYAN,MILIND N. JADHAV, JJ.DATE :MARCH 06, 2020 P.C.: Heard Mr. Naniwadekar, learned counsel for the petitioner andMr. Walve, learned standing counsel Revenue for respondent No.1. 2.Smt. Sheela Venkatesan, Income Tax Officer, Ward 25(1)(1),Mumbai is also present before the Court. 3.By filing this petition under Article 226 of the Constitution ofIndia, petitioner has assailed legality and validity of order dated01.12.2019 passed by respondent No.1 i.e., Income Tax Officer, Ward25(1)(1), Mumbai under Section 188A of the Income Tax Act, 1961(briefly 'the Act' hereinafter) directing him to make payment of the taxarrears as mentioned in the order. 4.Case of the petitioner is that he is an assessee under the Actassessed to tax as an individual. Prior to 31.03.2012, petitioner was apartner in the partnership firm M/s. Sambhav Enterprises registeredunder the Indian Partnership Act, 1932, referred to hereinafter as the'firm'. With effect from 31.03.2012, petitioner retired from the said firmand ceased to be a partner. 5.Notice under Section 188-A dated 06.11.2019 was issued byrespondent No.1 to the petitioner as a partner of the firm stating that ademand of Rs.30,85,40,488.00 was raised in the case of the firm for theassessment years 2011-12 and 2012-13, the break-up beingRs.3,79,370.00 for the first assessment year and Rs.34,61,410.00 for thesecond assessment year. It was stated that being one of the partners ofthe firm with share of profit / loss @ 20%, respondent No.1 proposed toinvoke the provisions of Section 188-A of the Act to recover theoutstanding demand from the petitioner in the capacity of a partner forthe assessment years 2011-12 and 2012-13 that is upto 31.03.2012 to theextent of Rs.38,40,780.00 plus interest under Section 220(2) of the Act.Hence, the show cause notice. 6.Petitioner replied to the show cause notice on 11.11.2019. It wasmentioned therein that there was no demand pending in the case of thefirm relating to the aforesaid two assessment years because against therelevant assessment orders, the firm had preferred appeals before theCommissioner of Income Tax (Appeals) - 37, Mumbai and theCommissioner of Income Tax (Appeals) i.e., the first appellate authorityhad allowed the appeals by deleting the additions / disallowances exceptsome minor additions / disallowances. Copies of the orders passed bythe first appellate authority dated 02.05.2017 were enclosed with theshow cause reply. 7.However, by the impugned order dated 01.12.2019, respondentNo.1 while taking note of the reply given by the petitioner observed thatthe reply was given only after service of notice. Considering the firmand the partners as defaulters, it was held that petitioner as partner of thefirm is jointly and severally liable along with the firm for payment of thetax arrears. demand for the assessment years 2011-12 and 2012-13 were raised butalso for the subsequent assessment year 2013-14 when admittedlypetitioner had retired as a partner of the firm with effect from31.03.2012. 9.Aggrieved by the above, present writ petition has been filed. 10.When learned counsel for the petitioner pointed out the anomaly,Mr. Walve, learned standing counsel submitted on the basis of theinstructions received from respondent No.1 who is present in the Courtthat there is no demand payable by the firm for the assessment years2011-12 and 2012-13 and consequently, question of raising of anydemand against the petitioner does not arise. Further, petitioner havingretired as partner of the firm with effect from 31.03.2012 raising anydemand against the petitioner for assessment year 2013-14 and onwardsalso does not arise. 9.Aggrieved by the above, present writ petition has been filed. 10.When learned counsel for the petitioner pointed out the anomaly,Mr. Walve, learned standing counsel submitted on the basis of theinstructions received from respondent No.1 who is present in the Courtthat there is no demand payable by the firm for the assessment years2011-12 and 2012-13 and consequently, question of raising of anydemand against the petitioner does not arise. Further, petitioner havingretired as partner of the firm with effect from 31.03.2012 raising anydemand against the petitioner for assessment year 2013-14 and onwardsalso does not arise. 11.In view of the statements made, we set aside the impugned orderdated 01.12.2019 issued by respondent No.1. 12.Writ petition is accordingly allowed but without any order as tocosts. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) Minal Parab