Discontinued firm assessment cannot be enforced against a partner without proper partner-level assessment and notice.

After discontinuance of a firm, the Income-tax Act did not permit assessment of the firm as such; liability had to be pursued against the partners, jointly or severally, in respect of the firm's income. A notice served on one partner for his total income could not sustain an assessment of the discontinued firm, and recovery could not be enforced against that partner without a demand notice in his capacity as partner. The court also held that no adequate alternative remedy existed where the assessment was not made against the petitioner personally, no demand notice had been served, and the appeal period had expired. Enforcement against the petitioner was restrained, subject to lawful proceedings against the partners.

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Issues: (i) Whether an unregistered firm, after discontinuance, could be assessed as a firm and its assessment enforced against a partner without separately assessing the partners; (ii) Whether the petitioner had an adequate alternative remedy against the impugned assessment and recovery action.

Issue (i): Whether an unregistered firm, after discontinuance, could be assessed as a firm and its assessment enforced against a partner without separately assessing the partners.

Analysis: A firm is a separate assessable entity under the Income-tax Act, but once the firm has been discontinued, Section 44 does not authorise assessment of the firm as such. The section preserves the liability of the partners and requires assessment of the partners, jointly or severally, in respect of the firm's income. A notice under Section 34 served individually on a partner calling for his total world income could not justify an assessment of the discontinued firm, nor could the resulting demand be executed against a partner who had not been served with a demand notice as a partner.

Conclusion: The discontinued firm could not be assessed as a firm after discontinuance, and enforcement of that assessment against the petitioner was impermissible.

Issue (ii): Whether the petitioner had an adequate alternative remedy against the impugned assessment and recovery action.

Analysis: Although an appeal ordinarily lay against an assessment order, the impugned assessment was not made against the petitioner personally, no demand notice had been served on him, and the period for appeal had by then become barred. The remedy therefore was not an adequate alternative remedy.

Conclusion: The petitioner did not have an adequate alternative remedy.

Final Conclusion: Relief was granted to the extent of restraining enforcement of the assessment order against the petitioner, while leaving liberty to proceed against the petitioner or other partners according to law.

Ratio Decidendi: After discontinuance of a firm, the firm itself cannot be assessed as a unit; assessment must proceed against the partners jointly or severally, and enforcement cannot be made against a partner without lawful assessment and notice in that capacity.

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