1972 (9) TMI 38 - HC - Income Tax

Travancore Excess Profits Tax Act - petitioner is the same in all these writ petitions and he has prayed for the issue of writs of certiorari to quash the four assessment orders of the same date, December 31, 1963, passed under the Travancore Excess Profits Tax Act - Whether assessment and recovery of excess profit tax could be made after disruption of a Hindu Undivided family - Whether a fresh plea could be made for the first time at the Appellate stage

Issues Involved:
1. Jurisdiction of assessments under the repealed Travancore Excess Profits Tax Act, 1120.
2. Applicability of Section 13 of the Finance Act of 1950.
3. Authority of Union authorities versus Travancore Act authorities.
4. Validity of assessments on a divided Hindu undivided family (HUF).

Issue-wise Detailed Analysis:

1. Jurisdiction of Assessments under the Repealed Travancore Excess Profits Tax Act, 1120:
The petitioner challenged the assessments on the grounds that the Travancore Excess Profits Tax Act of 1120 had been repealed in 1946, rendering any assessments under it without jurisdiction. The respondent countered that the Act was not repealed but merely provided that no chargeable accounting period would exist post-18-8-1121. The Court held that the extraordinary remedy under Article 226 of the Constitution could be invoked when statutory authority acts without jurisdiction or the order is a nullity. Since the petitioner questioned the jurisdiction of the respondent under the Travancore Act, the writ petitions were maintainable.

2. Applicability of Section 13 of the Finance Act of 1950:
The petitioner argued that Section 13 of the Finance Act of 1950 could not save the Travancore Act. The respondent contended that with the commencement of the Finance Act of 1950, the Travancore Act ceased to have effect except for the purposes of levy, assessment, and collection of excess profits tax for periods ending before April 1, 1950. The Court did not explicitly rule on this issue as it focused on the jurisdictional and validity concerns regarding the assessments.

3. Authority of Union Authorities versus Travancore Act Authorities:
The petitioner claimed that only authorities constituted under the Travancore Act could levy the tax, not Union authorities. The respondent argued that per the proviso to Section 13 of the Finance Act of 1950, references to authorities under the Travancore Act should be considered references to corresponding authorities under the Indian Income-tax Act of 1922. The Court did not delve deeply into this issue, focusing instead on the validity of the assessments on a divided HUF.

4. Validity of Assessments on a Divided Hindu Undivided Family (HUF):
The petitioner contended that the HUF had been divided in 1950, making the assessments on December 31, 1963, invalid. The respondent argued that the assessments were valid as the excess profits tax was a charge on the business, enforceable against the family assets regardless of partition. The Court held that the petitioner was entitled to raise the plea of family disruption and that assessments on a divided HUF were invalid. The Court referenced the decision in Commissioner of Excess Profits Tax v. Jivaraj Topun and Sons, which held that without a provision like Section 25A of the Indian Income-tax Act, assessments on a defunct HUF were invalid. The Court concluded that the assessments could not be sustained as the HUF did not exist at the time of assessment, and no provision in the Travancore Act allowed for such assessments post-disruption.

Conclusion:
The Court found the assessments to be without jurisdiction due to the invalidity of assessing a divided HUF. Consequently, the writ petitions were allowed, and the rules nisi were made absolute, with no order as to costs.

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