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TMI Blog1972 (9) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... o levy the tax are not the Union authorities but only those authorities constituted under the Travancore Act, and (4) there has been a partition between the petitioner and the other members of his family even in the year 1950 and that therefore the impugned assessments made on December 31, 1963, on the petitioner as the karta of the Hindu undivided family are not valid. The respondent is the same in all these petitions, and in the counter-affidavit filed by him he contends : (1) that the Travancore Act was not repealed with effect from 18-8-1121 as alleged by the petitioner and that it was only provided that there was to be no chargeable accounting period under the Act subsequent to 18-8-1121 ; (2) with the commencement of the Finance Act of 1950 (Central Act 25 of 1950) on April, 1950, the Travancore Act ceased to have effect, except for the remaining purposes of levy, assessment and collection of excess profits tax for the chargeable accounting periods ending on or before April 1, 1950, and that the accounting periods for which the assessments have been made clearly come within the operation of section 13 of the Finance Act of 1950 so as to enable the respondent to invoke the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised before the authorities constituted under the same statute. But where the statutory authority has purported to act without jurisdiction or where the order impugned is a nullity, this court can grant relief to the petitioner without driving him to have a resort to the statutory remedies. In this case the petitioner has questioned the jurisdiction of the respondent to act under the provisions of the Travancore Act and the same objection could be raised by him even in respect of the appellate authorities who are acting under the provisions of the Indian Income-tax Act. Therefore, in the special circumstances of these cases, we are not inclined to reject the writ petitions on the ground that the petitioner should have resorted to the remedy by way of appeals against the order of assessment under the Travancore Act. We next take up the contention as to whether the petitioner can be assessed as a karta of the Hindu undivided family under the Travancore Act for the periods in question after the Hindu undivided family has become divided in the year 1950. Mr. Balasubrahmanyan, learned counsel for the respondent, contends that the petitioner should not be allowed to raise the above con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be made thereon and he strongly relies on the decision of this court in Commissioner of Excess Profits Tax v. Jivaraj Topun and Sons, which was a case arising under the Excess Profits Tax Act, 1940. There the assessee was a Hindu undivided family. There was a partition in the family early in October, 1941, and the partition was accepted by the income-tax authorities in March, 1943. However, a notice under section 13 of the Excess Profits Tax Act, 1940, was served on one of the erstwhile members of the family in August, 1944, to file a return of income of the family in respect of three chargeable accounting periods which ended on the date of the partition and thereafter the family was assessed to excess profits tax. That assessment was challenged on the ground that the notice has been served on a person who was not a member of the family on the date on which the notice was served, the family having ceased to exist on that date, and that section 25A of the Income-tax Act which enabled the service of a notice on a defunct family not having been made applicable to the Excess Profits Tax Act by section 21, there cannot be a valid assessment under the Excess Profits Tax Act on a join ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In that case a joint Hindu family, of which the assessee was the karta, was assessed to income-tax for the year 1939-40. In the year 1944 the Income-tax Officer considered that certain income of the family taxable in 1939-40 had escaped assessment. In the meanwhile, the family had become divided and an order had been passed under section 25A(1) of the Act. Notwithstanding that order, the Income-tax Officer, issued a notice in the name of the joint family and served it on the assessee, the erstwhile karta, under section 34 read with section 22 calling upon him to make a return in respect of the escaped income, and the assessee sent a return in response to that notice. Thereafter, the Income-tax Officer made an assessment and issued a notice of demand on the assessee and to other members of the family without apportioning the liability amongst the three members of the family. The assessee challenged those proceedings on the ground that the reassessment proceedings were irregular and that he was not liable to pay anything. In those circumstances, the Supreme Court held that the reassessment proceedings were validly initiated and it was not necessary to issue the notice under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm for the calendar year 1942 and for a portion of the calendar year 1943, and took proceedings for recovery of the tax against him. The erstwhile managing partner contended that he could no longer represent the firm nor the other partner after the dissolution has taken place, and that, therefore, both the proceedings for assessment and recovery were not valid and that he was not an " assessee in default ". The Supreme Court upheld the assessment holding that the dissolution did not affect the validity of the assessment order passed after notice to the person in management of the business during the chargeable accounting periods as it was not the firm but the business that was the unit of assessment, that as section 21 of the Excess Profits Tax Act attracts sections 44 and 63 of the Income-tax Act, the procedure applicable to an undissolved firm was attracted to a dissolved firm, and that the partners continued to be liable jointly and severally even after the dissolution as they were liable before dissolution. The decision of this court in A. G. Pandu Rao v. Collector of Madras is also to the same effect. In that case proceedings under section 13 of the Excess Profits Tax Act we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly when an assessment is made, but that basis is no longer tenable in view of the decision in Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth-tax wherein the Supreme Court has ruled that the charge under the Income-tax Act arises as soon as income is earned and that the liability to pay income-tax was a present liability though the tax became payable after an order of assessment was made and that it was not a contingent liability but a perfected debt at any rate on the last day of the accounting year. It is true, in Commissioner of Income-tax v. Neekelal Jainarain, the court proceeded on the basis that the excess profits tax is not a debt owed by the family before partition and that only a debt due by the family could be realised after its disruption from its members, and the decision in Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth-tax clearly supports the contrary proposition that excess profits tax became a debt on the last day of the accounting period though the quantum has to be ascertained later. But even accepting the contention of the revenue that excess profits tax was a debt owed by the joint Hindu family which carried on the busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment made under this Act. It is not in dispute that none of the sections referred to therein contained a power similar to the one in section 25A or section 44 of the Indian Income-tax Act. Therefore, it has to be seen whether the provisions of section 15 of the Travancore Act would enable the Excess Profits Tax Officer to treat the Hindu undivided family which carried on the business during the chargeable accounting period in question as continuing even after its disruption for the purpose of assessment. As per section 15(2) a person who carried on the business during the chargeable accounting period can be made liable to pay the excess profits tax and the word " person " under the definition includes a Hindu undivided family. But section 15(2) naturally contemplates the existence of the person who carried on the business during the chargeable accounting period and that is why section 15(4) states that if the person who carried on the business is not alive, his legal representatives are to be proceeded against. Therefore, the joint family which carried on the business during the chargeable accounting period must continue to exist at the time of assessment so as to invoke the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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