Excess profits tax liability becomes enforceable only on assessment and demand, not mere chargeability after family disruption.

Under the Excess Profits Tax Act, the business was the subject of charge, but assessment and recovery still had to be made against the person carrying on that business. The article notes that, unlike section 25A of the Indian Income-tax Act, 1922, the Act contained no provision allowing assessment of members of a disrupted Hindu undivided family after disruption. It further states that mere chargeability did not create an enforceable tax debt; liability became enforceable only on assessment and service of a demand notice. On that basis, a disrupted Hindu undivided family was not liable to excess profits tax on the facts discussed.

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Issues: Whether excess profits tax could be assessed and recovered from a Hindu undivided family after its disruption where notices under section 13 had been served before disruption and whether service of such notices created a recoverable tax debt before assessment and demand.

Analysis: The Excess Profits Tax Act treated the business, not the person, as the subject of charge, while assessment and recovery had to be made against the person carrying on the business. The Act contained no provision comparable to section 25A of the Indian Income-tax Act, 1922, enabling assessment of members of a disrupted Hindu undivided family after disruption. The Court further held that mere chargeability of the business after the accounting period did not create an enforceable debt in the hands of the Government. Until an assessment order was made and a notice of demand issued, there was no debitum in praesenti. Since no debt existed on the date of disruption, Hindu law principles relating to liability for family debts after partition did not assist the Revenue.

Conclusion: The excess profits tax could not be assessed or recovered from the disrupted Hindu undivided family or its members on the facts of the case.

Final Conclusion: The reference was answered against the Revenue and in favour of the assessee.

Ratio Decidendi: Under the Excess Profits Tax Act, liability becomes enforceable only on assessment and demand, and in the absence of a statutory provision permitting assessment after disruption, a Hindu undivided family cannot be assessed to excess profits tax after its disruption merely because notices were served before disruption.

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