- (1.) These two special appeals arise out of proceedings under the Excess Profit Tax Act, 1940. There was a Hindu undivided family known as "Ramnath Ram Prasad." Ram Prasad was the karta of the Hindu undivided family. There was a disruption of the family some time by October 1, 1951. Under a scheme of voluntary disclosure, authorities were informed about a sum of Rs. 2,08,450 as income of the Hindu undivided family. Income Tax was assessed on that income. The authorities proceeded to assess excess profits tax on the same income. Three notices were issued under Sec. 13(1) of the Excess Profits Tax Act on February 14, 1957. Another notice under the same Act was issued on April 18, 1958, under Sec. 15 of the same Act, Ram Prasad and others field two writ petition challenging the validity of the various notices issued under Sec. 13(1) and 15 of the Act. The two connected special appeals by the Income Tax Officer, Gorakhpur, are directed against these orders, dated December 8, 1961. The main point urged for the petitioners before the learned single judge was what, in view of the fact that the Hindu undivided family disrupted as long as October 1, 1951. Proceeding under the Excess Profits Tax Act could not be initiated in 1957 or 1958. This contention has been accepted by the learned single judge.
(2.) HE relied upon Commissioner of Excess Profit Tax v/s. Jivaraj Topur and Sons. It was held by the Madras High Court in that case that there as no provision in the Excess profit Tax Act to assess a Hindu undivided family which had become defunct.
(3.) THE same view was taken by a Division Bench of the Allahabad High Court in Commissioner of Income Tax v/s. Neekelal Jainarain. It was held by this court that the business of the Hindu undivided family on which notice under Sec. 13 of the Excess Profits Tax Act had been served before the disruption on the Hindu undivided family could not be subjected to excess profits tax after the disruption of Hindu undivided family. Mr. Gopal Behari appearing for the appellant urged that these decisions are not sound, and require reconsideration. He relied upon a decision of the Supreme Court in E. M. Muthappa Chettiar v/s. Income Tax Officer, Special Circle, E. P. T. Circle, Coimbatore. It was held by the Supreme Court that, even assuming that a firm had been dissolved on some date anterior the assessment, 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 period, since it was not the firm but the business that was the unit of assessment. As Sec. 44 of the Income Tax Act was made applicable by Sec. 21 of the Excess Profits Tax Act to the latter Act, the procedure applicable to an undissolved firm was attracted to a dissolved firm, and the partners continued to be liable jointly and severally even after dissolution as they were liable before dissolution. As the provision of Sec. 63 of the Income Tax Act were also applicable to proceedings under the Excess Profit tax Act notice could be issued to and served on a partner of the firm, even if by the date notice as issued the firm was dissolved. In that case the Supreme Court was dealing with a dissolved firm. In the present case we are dealing with a joint Hindu Family, which was disrupted several years before the impugned notices were issued which was disrupted several years before the impugned notices were issued.;