Assessment on dissolved association of persons invalid without proper notices to members and compliance with section 44.

After dissolution of an association of persons, pre-dissolution income had to be assessed on the persons who were members at the time of dissolution, jointly and severally, and not on the dissolved association as a unit. A valid assessment under section 23(4) also required service of notice under section 22 as a condition precedent. Where proper notices were not served on a member, the assessment could not bind that person. The article distinguishes contrary excess profits tax provisions because they materially differed from section 44 as it then stood, and concludes that the assessment order was bad in law and not enforceable against the petitioner.

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Issues: Whether an assessment made under section 23(4) on a dissolved association of persons was valid where the assessment was made against the association as a unit instead of against the persons who were members at the time of dissolution, and whether liability for tax could be fastened on a member who had not been served with the requisite notices.

Analysis: Under the law then in force, section 44 of the Indian Income-tax Act required that, after dissolution of an association of persons, assessment of the pre-dissolution income had to be made on the persons who were members at the time of dissolution, jointly and severally. The assessment could not validly be made on the dissolved association itself as an assessee. Since notice under section 22 was a condition precedent to a valid assessment under section 23(4), and proper notices had not been served on the petitioner, the assessment could not bind him. The contrary view based on excess profits tax provisions was distinguished because those provisions materially differed from section 44 as it then stood.

Conclusion: The assessment order was bad in law and was not binding on the petitioner; the petitioner was not liable for the tax determined under that assessment.

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