Law:

Section:

Section 4, read with sections 13 and 14 of the Excess Profits Tax Act, 1940, read with section 25A of Indian Income-tax Act, 1922 - Excess profits - Chargeable as - Notices under section 13 were served on 8-6-1942 for periods 1-9-1939 to 14-11-1939 and 15-11-1939 to 24-10-1940 upon karta of assessee-HUF followed by assessment orders passed on 30-5-1944 - It was stated that assessee-HUF had been disrupted from 6-9-1943 and an order under section 25A of 1922 Act recognizing disruption was also passed - Whether there was a debt due from assessee-HUF to state on date of its disruption - Held, no - Whether liability of assessee to pay certain sum as excess profits tax accrued to it on issue of demand i.e. 30-5-1944 and since it had already disrupted before that date it was not liable to pay any tax and therefore demand notices served upon its karta were not enforceable - Held, yes FACTS The assessee-HUF carried on business in hemp and oilseeds. Notices as required by section 13 were served upon the karta of the HUF on 8-6-1942 to assess it for periods 1-9-1939 to 14-11-1940 and 15-11-1939 to 24-10-1940. An assessment order under the Act was passed against the assessee on 31-5-1944. On 24-10-1944, an application was made to the ITO on behalf of the assessee to the effect that it had been disputed with effect from 10-11-1942, and an order was sought for under section 25A(1) of the Indian Income-tax Act 1922. On 17-3-1947, the ITO passed an order under section 25A(1) of 1922 Act recognising disruption of the HUF with effect from 6-9-1943. Assessment order under the Act passed in respect of the two chargeable accounting periods on 31-5-1944, were quashed by the AAC. The ITO passed fresh assessment orders in respect of both the chargeable accounting periods. The assessee appealed against the two assessment orders and one of the grounds taken in the memoranda of appeals was that it was not served with any notice issued under section 13 and that, consequently, the assessment was invalid. The AAC maintained the assessment orders. On appeal the Tribunal allowed the appeals, but on the sole ground that after the disruption of the HUF the notice under section 13 could not be…

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