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TMI Blog1958 (2) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... Azur, 1357 F. and whether such an assessment is illegal and is to be set aside. Learned advocate for the appellant states that he does not wish to press question No. 4 as it is concluded by our decision in Commissioner of Income-tax, Hyderabad v. Adilakshmi Devamma, AIR 1955 Hyd 225. In that case a similar question fell for determination, viz. assuming that the Hyderabad Income-tax Act is intra vires whether the income of the previous year, that is to say. the income of 1356 F. could be validly taxed in 1357 F.? Dealing with this question we had on the analogy of Section 3 of the Hyderabad Income-tax Act which is similar to Section 3 of the Indian Income-tax Act observed at page 227 as follows : -- ..... .This basis of assessing income was changed by the Indian Income-tax Act 1922 when tax in the language of Lord Porter delivering the judgments of the Judicial Committee in the Indian Iron and Steel Co. Ltd. v. Commr. of Income-tax, Bengal, 1943-11 ITR 328 at p. 336 : (AIR 1943 PC 124 at p. 128), is assessed and paid in the next succeeding year upon the result of the year before. Therefore, our answer to the question referred to earlier in this paragraph is in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. S. Ahmed, who also wrote the subsequent letters on the letter head of Haji Wali Mohamed Haji Moosa Saya. The notices which were issued to the assessee were by the Income-tax Officer, 4th circle, Hyderabad, as he was in charge of the area where the assessee firm was situated. Later, however, after reshuffling the jurisdiction of the assessee was given to the 1st Circle instead of the 4th Circle and consequently the Income-tax Officer of the 1st Circle issued another notice under Section 30 (2) of the Hyderabad Income-tax Act on 22-6-1951 which was served on 22-6-1951 on Nur Mahomed, Nur Mahomed wrote a letter on 26-7-1951 on the letter head of Haji Razack Haji Mahomed Saya and signed it as manager. In this letter the assessee stated that the account books were with the eldest brother Haji Yousuf, who lived at Aurangabad and therefore requested the Income-tax Officer to get in touch with the eldest brother at Aurangabad. The Income-tax Officer, however, by his letter dated 2-8-1951 required the association carrying on business at Nizamshabi Road to file a return; but no return was filed. On 13-8-1951 Haji Razack for the first time wrote a letter denying 'that he has anything t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aya is returned with full facts and explanations herewith. On the same date Messrs. Raja Rani and Co., Auditors addressed a letter to the Income-tax Office: explaining the various contentions in detail. The Income-tax Officer, therefore, had to make a choice either of accepting the contentions or making an assessment under Section 31(4) which latter course he followed on 22-9-1951 by making a best-judgment assessment on a total income of ₹ 6,10,500/- rejecting the several contentions of the assessee and making a demand of O. S. ₹ 2,70,807/- or I. G. ₹ 2,32,172/-. Haji Razack thereafter filed an application under Section 39 of the Hyderabad Income-tax Act in which he stated though legally you can pick and choose any one of the old members, the proper course, in our opinion, should have been that you should issue notices to the party who was the senior member of the firm who had the control of the business and also of the books of account and requested for the cancellation of the assessment under Section 39 and to take immediate steps to initiate proceedings against Yousuf Haji Vali Mohamed of Aurangabad, senior member of the old firm. This was rejected by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r time; that subsequently similar notice under Section 30(2) was issued on 22-6-1951 and served on Noor Mahomed who acknowledged it on behalf of Haji Razack signing as its manager and on 13-8-1951 for the first time Haji Razack denied that he has anything to do with the defunct firm and requested time for enabling him to file a return. The question is whether these notices under Sections 30 (2) and 30 (4) were duly served on the assessee as required by law. This involves a further question whether after the firm was dissolved in the year of assessment, a notice served on any member of the firm Or his power of attorney agent can be Said to be duly served for the purposes of assessing the dissolved firm. The relevant provisions of the Hyderabad. Income-tax Act which require consideration are as follows: 30(2) In the case of any person other than a company whose total income is, in the Income-tax Officer's opinion: of such an amount as to render such person liable to income-tax, the Income-tax Officer shall serve a notice upon him requiring him to furnish, within such period, not being less than thirty days as may he specified in the notice, a return in the prescribed form and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness, profession or vocation of the period between the end of the previous year and the date of such discontinuance at the rate in force in that year, in addition to the assessment if any, made on the basis of the income, profits and gains of the previous year. (2) Any person discontinuing business, profession or vocation in any year, shall give to the Income Tax Officer notice of such discontinuance within fifteen days thereof. (3) X X X (4) Where an assessment is to be made under Sub-section (1), the Income-tax Officer may serve on the person whose income, profits and gains arc to be assessed or in the case of a firm, on any person who was a member of such firm at the time of its discontinuance, or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under Sub-section (2) of Section 30 and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that Sub-section. 56. Where any business, profession or vocation carried on by a firm or association of persons has been discontinued, or where an association of persons is dissol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly liable to assessment and also are liable for the amount of tax payable where the assessment has been made on the firm or association, but the tax has not been recovered from it. The section is not confined to the profits of only the year of discontinuance or dissolution but extends also to the profits of the preceding years, the principle being that when unit of assessment breaks up, the liability to tax should devolve on the component members. 7. Learned advocate for the assessee sought to contend that as there was a difference between Section 78 of the Hyderabad Income-tax Act and Section 63 of the Indian Income-tax Act, the service of notice on any one individual partner is not sufficient service for assessing the partnership. This argument is not really relevant for the determination of the question under reference, because, when there is a specific section which authorises the service of notice on any member of a dissolved or discontinued firm for the purposes of imposing a tax liability upon such firm, it cannot be contended that there should be a special provision in Section 78 for service of a notice on any individual member before any liability to tax can be imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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