Improper reassessment and recovery without valid service were held unenforceable under income-tax law.

Reassessment against court receivers as representative assessees was invalid where the receivers had not been appointed to receive income for the relevant prior periods, and reopening beyond the statutory period was also impermissible; the resulting demands were therefore unenforceable. Recovery under the Excess Profits Tax Act could not proceed without proof of service of the demand and assessment order on the assessee or an authorised recipient, so the recovery action was premature. The same principle applied to later income-tax demands: without service of the notice of demand and assessment orders, coercive recovery could not lawfully be enforced, and the assessee could challenge the assessments after lawful service.

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Issues: (i) whether the reassessment orders for the assessment years 1942-43 to 1947-48 under the Indian I.T. Act, 1922, were valid and enforceable against the petitioners; (ii) whether the recovery proceedings based on reassessments under the Excess Profits Tax Act were sustainable; (iii) whether the recovery proceedings for the income-tax demands for the assessment years 1948-49 to 1956-57 could be enforced without service of the notice of demand and assessment orders.

Issue (i): whether the reassessment orders for the assessment years 1942-43 to 1947-48 under the Indian I.T. Act, 1922, were valid and enforceable against the petitioners.

Analysis: The reassessments were found to have been made against the court receivers as representative assessees under Section 41 of the Indian I.T. Act, 1922, although the receivers had not been appointed to receive income on behalf of the firm for the relevant prior periods. A receiver cannot be treated as a representative assessee for income derived before his appointment. The reopening was also beyond the statutory period under Section 34(1)(b), and the persons sought to be proceeded against did not fall within the restricted expression "any person" in the proviso relied upon by the Revenue.

Conclusion: The reassessment orders for the years 1942-43 to 1947-48 were without jurisdiction and the resulting demands were unenforceable against the petitioners.

Issue (ii): whether the recovery proceedings based on reassessments under the Excess Profits Tax Act were sustainable.

Analysis: The recovery proceedings under the Excess Profits Tax Act depended on service of the demand and the assessment order on the assessee or the person entitled to receive them on its behalf. The record did not establish such service, and the Court treated the recovery action as premature at that stage. The validity of the reassessment orders themselves was left open for challenge before the statutory appellate forum once proper service was effected.

Conclusion: The recovery proceedings under the Excess Profits Tax Act were not sustainable at that stage.

Issue (iii): whether the recovery proceedings for the income-tax demands for the assessment years 1948-49 to 1956-57 could be enforced without service of the notice of demand and assessment orders.

Analysis: Recovery under the Act could not lawfully proceed unless the notice of demand and the assessment orders had been served on the assessee or the person entitled to receive them on its behalf. The respondents failed to establish proper service for the relevant years, and therefore the coercive recovery steps were premature. The Court did not pronounce on the merits of the underlying assessments, leaving the assessee free to challenge them after lawful service.

Conclusion: The recovery proceedings for the later assessment years were without jurisdiction and liable to be quashed.

Final Conclusion: The petitions succeeded substantially, with the impugned recovery measures set aside and the demands under challenge rendered unenforceable, while leaving open the assessee's right to contest assessments after lawful service where applicable.

Ratio Decidendi: A reassessment or recovery action under the income-tax law cannot be sustained unless it is directed against the legally correct assessee or representative assessee, is within the statutory period of reopening, and is preceded by proper service of the notice of demand and assessment order where recovery is sought.

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