Law:

Section:

Section 148 of the Income-tax Act, 1961 (Corresponding to section 34 of the Indian Income-tax Act, 1922) - Income escaping assessment - Issue of notice for - Assessment years 1948-49 and 1949-50 - Whether in case of a dissolved firm a valid notice can be issued under section 34 of 1922 Act for assessment or re-assessment of firm - Held, yes Section 282 of the Income-tax Act, 1961 (Corresponding to section 63 of the Indian Income-tax Act, 1922) - Notice - Service of - Whether where two partners of dissolved firm were limited companies, service of notice to accounts officer of one of company who was not only looking after work of assessee -firm but also work of two companies, was valid - Held, yes FACTS The two companies entered into a partnership and formed the assessee- company. Subsequently the two companies were merged as a result of the High Court's order dated 25-7-1957 with retrospective effect from 1-11-1955. The ITO had, in the meantime, started proceedings under section 34 of 1922 Act against the assessee-company and had issued a notice on 20-3-1957, addressed to the assessee-company. He also made assessments in the status of an unregistered firm for both these assessment years. The AAC dismissed the assessee's appeals. Before the Tribunal, the assessee contended that in view of merger of the two companies, there was no firm in existence on the date of the issue of the notice and therefore, the impugned notice was not validly served. The Tribunal found that the notice was accepted by the accounts officer who was looking after the work on behalf of the assessee as well as the work of the two companies which were the only partners of the assessee-company. It, therefore, held that the service of notice was proper. The assessee's appeal was, accordingly, dismissed. On reference : HELD Section 44 of 1922 Act operates in two classes of cases: Where there is discontinuance of business, profession or vocation carried on by a firm or association, and where there is dissolution of the firm or association. The mere dissolution of a firm without discontinuance of its business would not attract the application of section 44 of the 1922 Act. It is only where there is…

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