MANCHANDA J. - This is a case stated under section 66 (1) of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act). The question referred is :
'Whether, on the facts and in the circumstances of the case, the assessments made on the firm for the assessment years 1953-54 and 1954-55, after its dissolution without issuing separate notices to all the partners of the defunct firm is bad in law ?'
The material facts are these : The relevant assessment years are 1953-54 and 1954-55. Notices under section 22 (2) of the Act were issued to Messrs. Nand Kishore Sita Ram on 16th July, 1953, and 10th June, 1954, for the relevant assessment years respectively and were served on 25th July, 1953 and 17th July, 1954, on one of the partners. The return of income dated 8th April, 1956, was filed on 9th April, 1956, and was signed by Nand Kishore Gupta, who was a partner in respect of the assessment year 1953-54. No return of income was filed for the assessment year 1954-55, and the assessment was ultimately made under section 23 (4) on the 19th of July, 1958. For the assessment year 1953-54, an application for registration under section 26A of the Act signed by Puran Chand Gupta, Nand Kishore Gupta and Sita Ram as partners was filed on 26th February, 1953, but no application was filed for 1954-55. For the assessment year 1953-54, notices under section 22 (3) and 23 (2) of the Act were issued to the address of Messrs. Nand Kishore Sita Ram but were not complied and the assessment was completed on March 27, 1958, in the name of Messrs. Nand Kishore Sita Ram under section 23 (4) of the Act. Application for reopening the assessments for both the years also rejected by the Income-tax Officer.
Aggrieved, the assessee filed appeals before the appellate assistant Commissioner, challenging the validity of the assessments on the ground that they were made against a firm after its dissolution and as such were illegal. It appears that notice of the dissolution was never given till the 20th of March, 1952, in respect of the assessment year 1949-50. The Appellate Assistant Commissioner allowed the appeals holding that no assessments could be made on a dissolved firm. The department took the matter up in appeal to the tribunal on the ground that an assessment could be made even on a dissolved firm provided notice was served on a partner thereof. Hence this reference at the instance of the assessee.
The question referred now stands concluded by three decisions of the Supreme Court. In C. A. Abraham v. Commissioner of Income-tax it was held, applying the provisions of section 44 of the Act, 'that the assessment proceedings may be commenced and continued against a firm of which business is discontinued as if discontinuance has not taken place. It is enacted manifestly with a view to ensure continuity in the application of the machinery provided for assessment and imposition of tax liability notwithstanding discontinuance of the business of firms. By a fiction, the firm is deemed to continue after discontinuance for the purpose of assessment under chapter IV.' This view was reiterated in Commissioner Income-tax v. Raja Reddy Mallaram and Shivram Poddar v. Income-tax Officer. A Division Bench of this court, of which one of us was a member in Chanda Lal Ghanshyam Dass v. Commissioner of Income-tax (Income-tax Reference No. 61 of 1957, decided on 4th August, 1965) has followed the aforesaid Supreme Court rulings.
For the reasons given above the question referred is answered against the assessee by saying that the assessments made were valid in law. The reference is answered accordingly. In the circumstances of the case there will be no order as to costs. Counsels fee is assessed at Rs. 250.