Mandatory assessment through deemed agent bars direct notice to a non-resident principal under the statutory scheme.

Under the statutory scheme for non-resident assessees, income was required to be assessed in the name of the agent, and the agent was deemed to be the assessee for purposes of notice and assessment. The court treated the use of "shall" as mandatory and read the agent-deeming provision as the prescribed mode for proceeding under the Act. Direct notice to the non-resident principal was therefore impermissible, save for limited recovery against assets found in British India.

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Issues: Whether, in the case of a non-resident assessee, the Income-tax Officer could serve notice directly on the principal without first appointing an agent under the Act.

Analysis: The relevant scheme of the Act treated non-resident income as chargeable in the name of the agent, and Section 42(1) made such agent the assessee for the purposes of the Act. The use of the word "shall" was construed as mandatory, and Section 43 was read as providing the mode for deeming a person to be the agent. On that construction, the department was not competent to proceed against the non-resident principal directly, except to the limited extent of recovering arrears from assets found in British India.

Conclusion: The question was answered in the affirmative, and the assessee's contention succeeded.

Final Conclusion: Direct notice to a non-resident principal was held impermissible under the statutory scheme, and the assessment machinery had to operate through the agent deemed under the Act.

Ratio Decidendi: Where the charging provision expressly requires non-resident income to be assessed in the name of the agent and deems the agent to be the assessee, the statutory procedure is mandatory and excludes direct notice to the non-resident principal.

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