Valid tax notice requires a legally existing assessee; service on a former Hindu undivided family member could not sustain assessment.

Under the Excess Profits Tax Act, assessment had to be initiated by valid notice to a legally existing person liable to tax, because the liability was imposed on the person and not on the business as an abstract entity. Service on a manager or adult male member of a Hindu undivided family was permissible only while the family continued as a joint unit; once the family had already been disrupted and ceased to exist, there was no statutory machinery to serve notice or assess the discontinued unit. Proceedings begun after such disruption were therefore not valid in law.

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Issues: Whether proceedings under the Excess Profits Tax Act could validly be initiated by notice served on a member of a Hindu undivided family after the family had already been disrupted and ceased to exist as a unit.

Analysis: The liability under the Excess Profits Tax Act was held to be one imposed on the person, not on the business as an abstract entity. A notice under Section 13 had to be addressed to the person whom the authorities believed to be liable, and in the case of a Hindu undivided family that meant the family as a continuing unit. While Section 63 of the Income-tax Act, made applicable to Excess Profits Tax proceedings, permitted service on the manager or an adult male member of a joint family, that presupposed the continued existence of the family as a unit. Where the family had already become defunct before notice was issued, the Act contained no machinery for service of notice or for assessment of the discontinued family. The gap could not be filled by judicial construction.

Conclusion: Proceedings initiated by serving notice on a member of a Hindu undivided family after the family had ceased to exist were not valid in law. The answer to the reference was in favour of the assessee and against the Commissioner.

Ratio Decidendi: Under the Excess Profits Tax Act, assessment must be initiated by valid notice to a legally existing person liable to tax, and where a Hindu undivided family has already been disrupted and no longer exists, service on one former member cannot sustain assessment in the absence of statutory machinery.

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