Assessment against a dissolved company is void, and civil refund relief remains available where tax recovery is jurisdiction.

An income-tax assessment made after a company's dissolution was treated as void because proceedings against a non-existent assessee lacked statutory authority. The transferee-company was not fastened with the transferor-company's tax demand or penalty since no valid notice of demand or participation in the assessment proceedings was shown against it, and estoppel or fraud could not be invoked without pleading and proof. The civil suit for refund was not barred by section 67 of the Income-tax Act, 1922, because the recovery action was without jurisdiction and contrary to mandatory procedure. The recovery proceedings were therefore illegal and the refund claim succeeded.

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Issues: (i) Whether an income-tax assessment made against a company after its dissolution was valid; (ii) whether the transferee-company could be fastened with liability for the transferor-company's tax demand and penalty in the absence of notice and participation in the assessment proceedings; (iii) whether a civil suit for refund was barred by section 67 of the Income-tax Act, 1922.

Issue (i): Whether an income-tax assessment made against a company after its dissolution was valid.

Analysis: An order of assessment passed against a person or entity that had ceased to exist was treated as ineffective in law. The assessment here was made after the transferor-company had stood dissolved pursuant to amalgamation, and no legal machinery under the statute was shown to authorise assessment against a non-existent assessee.

Conclusion: The assessment against the dissolved company was invalid and a nullity.

Issue (ii): Whether the transferee-company could be fastened with liability for the transferor-company's tax demand and penalty in the absence of notice and participation in the assessment proceedings.

Analysis: Although an amalgamation order may transfer assets and liabilities, liability under the income-tax law could not be enforced against the transferee unless proceedings were validly taken against it or its participation in the assessment process and service of the requisite notice were established. The record did not show service of notice of demand on the transferee-company, nor did it prove its participation in the assessment proceedings. In these circumstances, estoppel and fraud could not be invoked against it, particularly when they were neither pleaded nor supported by evidence.

Conclusion: The transferee-company was not liable for the tax demand or penalty raised against the transferor-company.

Issue (iii): Whether a civil suit for refund was barred by section 67 of the Income-tax Act, 1922.

Analysis: The statutory bar on civil suits did not apply where the mandatory procedure under the Act had not been complied with and the recovery action was without jurisdiction. Since no valid notice of demand was shown and the recovery was made against a defunct assessee, the proceedings were outside the lawful authority of the income-tax officials. In such a situation, the civil court remained competent to grant relief.

Conclusion: The suit was not barred by section 67 of the Income-tax Act, 1922.

Final Conclusion: The recovery proceedings were held illegal and without jurisdiction, and the plaintiff's suit for refund was decreed.

Ratio Decidendi: An assessment and recovery made without compliance with mandatory statutory procedure, and against a non-existent assessee, are without jurisdiction; in such cases the bar of civil suit under the Income-tax Act does not exclude a civil remedy.

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