9911796707
TMI Blog1963 (11) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ess was then discontinued, and the Group was dissolved. Tbe Group did not make a return of its income pursuant to the general notice under section 22(1) of the Indian Income-tax Act. The Income-tax Officer, Nizamabad Circle, issued a notice under section 34 of the Income-tax Act calling upon Baba Gowd---one of the members of the Group---to file a return of the income of the Group, but Baba Gowd failed to file the return on the due date. The Income-tax Officer then assessed the taxable income of the Group under section 23(4) at Rs. 51,000 , and determined Rs. 8,826-14-0 as the tax payable. Attempts made by the income-tax department to recover the tax from Baba Gowd having proved unsuccessful, on March 13, 1954, the Income-tax Officer issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable for the amount of tax payable as determined in that order of assessment by reason of the terms of section 44 of the Income-tax Act ? " The High Court answered the first question in the affirmative and held that the second question did not' fall to be determined. In arriving at its conclusion the High Court recorded the following findings : " (i) On the facts and in the circumstances of this case, the order of assessment made by the Income-tax Officer under section 23(4) on September 30, 1953, is bad in law : (a) absolutely, because he made the assessment of the association and not of those who were members of the association at the time of the dissolution jointly and severally ; and (b) particularly as against any member on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." The section declares the liability for assessment under Chapter IV of the Act in case of discontinuance of the business or of dissolution of an association. The Group admittedly discontinued its business at the end of Fasli year 1358 and it was also dissolved. Every person who was at the time of such discontinuance or dissolution a member of the Group was by the express terms of section 44 liable to be assessed jointly and severally in respect of the income, profits and gains of the Group and was also liable for the amount of tax payable. This court, in examining the scheme of section 44 as it stood be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not adjudicate upon the validity of the order imposing penalty without deciding whether there was a valid assessment, for an order imposing penalty postulates a valid assessment. Counsel for the respondent contended that even if the assessment after dissolution of the Group be regarded as valid, it is binding upon only those persons who were served with the notice calling for a return, and in support of this plea relied upon the clause " every person who was at the time of such ... dissolution, a member of such association shall, in respect of the income ... of the association be jointly and severally liable to assessment." He urged that the expression " every person" in section 44 means all persons, and that by enacting that such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation with a personality apart from the members constituting it, and if that personality is for the purposes of Chapter IV, in so far as it relates to assessment, continued, the theory of assessment binding only upon members who were served with the notice of assessment can have no validity. This view is supported by the use of the expression " tax payable " in section 44 which, in the context in which it occurs, can only mean tax which the association but for dissolution, or discontinuance of its business, would have been assessed to pay. Since the primary purpose of section 44 is to bring to tax the income of the association after it is dissolved or its business is discontinued, assessment of an aliquot share of that income is not conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But no such contention was raised before the Tribunal. It does not arise out of the order of the Tribunal, and the question referred by the Tribunal to the High Court does not justify consideration of that plea. The respondent cannot be permitted to raise a question which did not arise out of the order of the Tribunal, and has not been referred. The case must be decided on the footing that notice of assessment was properly served on Baba Gowd and that the assessment was properly made by the Income-tax Officer under section 23(4). We hold that the answer to the first question will be in the negative. If the order of assessment is held to be valid, the application made by the respondent for setting aside the assessment on the ground that h ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
