Reassessment after Hindu family partition remains valid; defective notice or apportionment may not defeat liability under the tax law.

After partition of a Hindu undivided family, reassessment for escaped income may proceed under Section 34 of the Income-tax Act, 1922 read with Section 25A(2), because Section 34 is not an independent assessment provision and the liability passes to the ex-members. Notice should be addressed to the persons liable after partition, so a notice in the name of the defunct family is procedurally defective. Even so, where an ex-member actually receives notice and submits a return, such defects in initiation or in the apportionment of the assessment do not necessarily invalidate the reassessment; separate proportional assessments may be made under Section 25A(2).

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Issues: (i) whether proceedings under Section 34 of the Income-tax Act, 1922 could be validly initiated and completed after a Hindu undivided family had ceased to exist and an order under Section 25A(1) had already been passed; (ii) whether notice under Section 34 had to be served on each ex-member of the divided family and whether defects in initiation or completion vitiated the assessment.

Issue (i): whether proceedings under Section 34 of the Income-tax Act, 1922 could be validly initiated and completed after a Hindu undivided family had ceased to exist and an order under Section 25A(1) had already been passed.

Analysis: Section 34 is not an independent assessment provision; the assessment is still made under Section 23, and once notice under Section 34 is served the procedure under the Act applies so far as may be. Section 25A(2) governs assessment after partition and does not exclude Section 34. The Income-tax Officer is therefore competent to proceed under Section 34 read with Section 25A(2) even though the Hindu undivided family has ceased to exist.

Conclusion: The initiation of proceedings under Section 34 read with Section 25A(2) was valid.

Issue (ii): whether notice under Section 34 had to be served on each ex-member of the divided family and whether defects in initiation or completion vitiated the assessment.

Analysis: Under Section 34 the notice must be served on the person liable to pay the tax, and after partition the liability falls on the ex-members under Section 25A(2). Notice therefore ought to be issued to each ex-member. The notice in the name of the defunct family was procedurally defective, but the defect did not assist the assessee who actually received notice and submitted a return. The further defect in completing the assessment without apportionment was also procedural and could be corrected by making separate proportional assessments in accordance with Section 25A(2).

Conclusion: The procedural defects did not invalidate the assessment as against the assessee who received notice and was liable under the proviso to Section 25A(2).

Final Conclusion: Proceedings under Section 34 were maintainable in relation to the former Hindu undivided family by proceeding against its ex-members under Section 25A(2), and the irregularities in notice and completion did not defeat the assessment in the present case.

Ratio Decidendi: After partition of a Hindu undivided family, reassessment for escaped income may be made under Section 34 read with Section 25A(2) of the Income-tax Act, 1922, and procedural defects in the form of notice or apportionment do not necessarily vitiate the assessment where the liable ex-member has received notice and remains jointly and severally liable.

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