A partnership’s voluntary payment toward a partner’s tax demand does not warrant a writ-ordered refund.

A liquor business originally operated as the proprietorship of Surender Gupta.

On 8 June 2017, Mahavir Mittal and Anu Mittal joined the business, and a partnership was formed in which Gupta held a 1% share.

The firm sought a refund of ₹1 crore, comprising two fixed deposits of ₹40 lakh each and a cheque for ₹20 lakh, said to have been obtained by the Income Tax Department towards individual tax demands against Gupta for assessment years 2011–12 and 2016–17.

The firm alleged coercion; the Department maintained that the amounts had been tendered voluntarily.

The Court noted that the Department had not been informed of the change in the business’s constitution before the payment, and that the partners had taken conflicting positions.

1. Whether the Department’s receipt of ₹1 crore from the firm towards Gupta’s individual tax demands was unlawful and entitled the firm to a refund with interest

2. Whether the firm established that the payment was forcibly recovered, rather than voluntarily tendered

3. Whether the writ petition was an appropriate forum to resolve the dispute between the partners concerning the payment

The judgment cites no specific statute, regulation, or precedent.

It applies the principles that writ relief requires a demonstrated illegality, error, or arbitrariness in the public authority’s action, and that a writ court is not a forum for resolving private disputes between partners.

The Court also considered whether the Department had been notified of the relevant change in the business’s constitution when it received the payment.

The Court found that the firm had tendered the fixed deposits and cheque on 8 June 2017 and that the record did not establish coercive recovery.

The Department had not been informed of the partnership’s constitution before the amount was tendered; the firm raised the issue only after payment.

Given the conflicting positions among the partners, the Court treated the dispute over payment of Gupta’s individual liability from firm funds as an inter se matter.

It found no illegality, error, or arbitrariness in the Department’s action warranting writ intervention.

It dismissed the petition as devoid of merit and disposed of any pending applications.