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TMI Blog1966 (7) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 26(2) of the Income-tax Act, 1922, for the assessment year 1957-58 is justified in law ? " Section 26(2) of the Income-tax Act, 1922, provides in certain cases for an assessment being made on the person succeeding another who has been carrying on a business. This is contained in the proviso to sub-section (2) of Section 26, which runs thus: " Provided that, when the person succeeded in the business, profession or vocation cannot be found, the assessment of the profits of the year in which the succession took place up to the date of succession, and for the year preceding that year shall be made on the person succeeding him in like manner and to the same amount as it would have been made on the person succeeded or when the tax in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclared a net wealth of Rs. 3,73,903 but the point to be seen is whether the tax could be recovered from Damodaran. It is not the existence of assets but the hard fact whether the department could recover the tax dues from this person. If every effort made by the department fails and if an assessee goes on denuding himself of all valuable assets, it can truly be said that taxes could not be recovered from the assessee. " Counsel on behalf of the assessee has contended that there is a clear misapprehension in the mind of the Tribunal when it states that the existence of the assets is not material. If the case rested purely on the observation which we have extracted and which gave rise to the argument before us, we venture to think that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the proviso to section 26(2). This tax shall be payable by R. K. V. Motors and Timbers (P.) Ltd., the person who succeeded to the business of Sri Damodaran in timber and transport. " In the statement of facts of this case, in paragraph 4, these facts are mentioned. These indicate that it is extremely doubtful whether there were assets available with the said Damodaran who transferred his business to the company which is now being proceeded against for the tax. In these circumstances, we do not think that the proviso has been pressed into service without justification. The result is that the question referred to us has to be answered in the affirmative, i.e., against the assessee, and in favour of the department. We do so. We make no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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