TMI Blog1964 (7) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... Button Factory, Chheharta, validly made on January 20, 1958, when the firm was dissolved on April 30, 1957? The brief facts of the case are that the assessee-firm, Chheharta Button Factory, is an unregistered firm. A notice under section 22(2) of the Act was issued and served on the assessee on the 28th May, 1963, in respect of the assessment year 1953-54. During the course of assessment proceedings, the assessee sent two letters dated the 27th December, 1957, and 16th January, 1958, informing the Income-tax Officer that the business of the assessee had been closed. The Income-tax Officer, vide his order dated the 20th January, 1958, assessed the income of the firm to be ₹ 40,939. In appeal by the assessee it was contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gains of the firm or association, be jointly and severally liable to assessment under Chapter IV and for the amount of tax payable and all the provisions of Chapter IV shall, so far as may be, apply to any such assessment. Dealing with the object of the above provision of law their Lordships of the Supreme Court observed in Shivram Poddar v. Income-tax Officer, Central Circle II, Calcutta [1964] 51 ITR 823 : The object of the enactment is clear: it is to authorise assessment of tax on income, profits or gains earned in a business, profession or vocation carried on by a firm or association before discontinuance of the business, profession or vocation, or before dissolution of the association, and to impose joint and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Radheshyam was an unregistered firm and by the discontinuance of the business it neither ceased to be liable to pay tax on the income earned by it, nor could a procedure different from the one prescribed under Chapter IV apply for the assessment of the income of that firm . C.A. Abraham v. Income-tax Officer, Kottayam [1961] 41 ITR425 (SC) is another case decided by the Supreme Court in which the effect of section 44 of the Act was considered and it was observed: Section 44 sets up machinery for assessing the tax liability of firms which have discontinued their business and provides for three consequences, (1)that on the discontinuance of the business of a firm, every person who was at the time of its disco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In that case the court found that the notice under section 34 of the Act, which was served on a partner of the firm, was not valid and no proper assessment could be made on the basis of the aforesaid notice. The assessment was, accordingly, held to be invalid on that ground. It was also observed that no assessment order could be made against a dissolved firm with regard to its pre-dissolution income. It would thus appear that the observations about the assessment order being made against a dissolved firm were in the nature of obiter dicta. The above-mentioned Calcutta authority was also cited before the Supreme Court in Shivram Poddar's case [1964] 51 ITR 823 and the observation made in the Calcutta authority was held to be obiter. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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