Assessment against dissolved firm is invalid absent statutory authority; proceedings may be remitted if dissolution date is unresolved.

A dissolved partnership firm ceases to exist for assessment purposes, so an assessment made after dissolution is invalid unless the statute expressly authorises assessment of a dissolved firm. Initiating proceedings before dissolution, or delayed notice of dissolution, does not by itself preserve the power to complete assessment after the firm has ceased to exist. Where the record does not conclusively establish whether dissolution occurred before the assessment order, the matter must be remitted for a fresh factual finding on the date of dissolution before final determination.

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Issues: (i) whether an assessment order could validly be made against a firm after its dissolution in the absence of a statutory provision authorising assessment of a dissolved firm; (ii) whether the matter required a fresh factual finding on the date of dissolution before the writ petition could be finally decided.

Issue (i): whether an assessment order could validly be made against a firm after its dissolution in the absence of a statutory provision authorising assessment of a dissolved firm.

Analysis: The governing principle is that a firm, though not a legal entity under partnership law, is treated as a legal entity for tax purposes while it exists. Once the firm is dissolved, it ceases to have legal existence. In the absence of a statutory provision permitting assessment of a dissolved firm, an assessment order made after dissolution cannot stand. The earlier decision on the point was applied to reject the view that initiation of proceedings before dissolution, by itself, preserved the power to complete assessment after dissolution.

Conclusion: The assessment could not be sustained merely because the proceedings had begun before dissolution and notice of dissolution was delayed.

Issue (ii): whether the matter required a fresh factual finding on the date of dissolution before the writ petition could be finally decided.

Analysis: The record did not contain a definitive finding on whether the firm had in fact been dissolved before the assessment order was made. Since the legal result depended on that factual question, the writ petition could not be finally resolved without an express finding on dissolution.

Conclusion: The matter had to be remitted for a fresh decision after recording a definite finding on dissolution.

Final Conclusion: The High Court's order was set aside and the case was sent back for reconsideration on the factual issue of dissolution, while the legal position that a dissolved firm cannot be assessed without statutory authority was affirmed.

Ratio Decidendi: In tax law, a firm that has dissolved ceases to exist for assessment purposes, and an assessment made after dissolution is invalid unless the statute expressly authorises assessment of a dissolved firm.

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