Reassessment notice must be issued to the firm, not just a partner; separate penalty sustained on written record.

A notice under section 34(1)(a) of the Income-tax Act, 1922 is the jurisdictional foundation for reassessment and must be issued to the assessee whose income is sought to be reopened; a notice addressed only to an individual partner did not validly reopen the unregistered firm's assessment, so the reassessment and the penalties linked to that assessment year failed. By contrast, default under section 22(2) was established where the return was filed late, and the successor Income-tax Officer could decide the penalty proceedings on the existing written record without a fresh oral hearing, so the separate penalty for the later assessment year was sustained.

---

---

Issues: (i) Whether a notice under section 34(1)(a) of the Income-tax Act, 1922, addressed to a partner and not to the firm, was a valid notice for reopening the assessment of an unregistered firm whose income was sought to be reassessed. (ii) Whether the penalty imposed for non-compliance with the notice under section 22(2) could be sustained when the order was made by the successor Income-tax Officer on the basis of written submissions only.

Issue (i): Whether a notice under section 34(1)(a) of the Income-tax Act, 1922, addressed to a partner and not to the firm, was a valid notice for reopening the assessment of an unregistered firm whose income was sought to be reassessed.

Analysis: The notice under section 34(1)(a) is the foundation of jurisdiction for reassessment and must be issued to the assessee whose income is proposed to be reassessed. Where the original assessment was of an unregistered firm, the assessee for that purpose was the firm itself. The impugned notice was addressed to an individual partner and, on its language, called for a return of that partner's income rather than the firm's income. Mere description of the addressee as a partner of the firm did not convert the notice into one against the firm. Section 44 did not alter this requirement, because dissolution did not dispense with the need for a proper notice against the firm.

Conclusion: The notice was invalid, the reassessment was without jurisdiction, and the consequential penalties for the assessment year 1950-51 also failed.

Issue (ii): Whether the penalty imposed for non-compliance with the notice under section 22(2) could be sustained when the order was made by the successor Income-tax Officer on the basis of written submissions only.

Analysis: The return had not been filed within the time allowed by the notice under section 22(2), so default was established. Acceptance of a belated return did not waive the earlier default. As no oral evidence was taken and no oral hearing had been concluded before the predecessor officer, the successor Income-tax Officer was competent to decide the penalty proceedings on the existing written record without issuing a fresh notice.

Conclusion: The penalty of Rs. 3,000 for the assessment year 1952-53 was valid and was upheld.

Final Conclusion: The challenge succeeded only to the extent that the reassessment and the penalties linked to the assessment year 1950-51 were quashed, while the separate penalty for the assessment year 1952-53 was sustained.

Ratio Decidendi: For reassessment under section 34(1)(a) of the Income-tax Act, 1922, the notice must be issued against the assessee whose income is sought to be reopened, and a notice addressed only to an individual partner does not validly confer jurisdiction to reassess the firm's income.

---