Discontinued business after firm dissolution can still be assessed, with partners jointly liable for the firm's tax.

Section 44 of the Indian Income-tax Act, 1922 applies where a firm's business has been discontinued, including on dissolution, so the assessment machinery continues despite cessation. The partners who were partners at the time of discontinuance remain jointly and severally liable for the firm's tax. Mere dissolution without discontinuance would not by itself attract the provision, but on these facts the dissolution brought about discontinuance, so the assessment notice was valid and the challenge failed.

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Issues: (i) Whether section 44 of the Indian Income-tax Act, 1922 applies to a dissolved firm where the business has been discontinued, so as to permit assessment of the firm's income and impose joint and several liability on the partners.

Issue (i): Whether section 44 of the Indian Income-tax Act, 1922 applies to a dissolved firm where the business has been discontinued, so as to permit assessment of the firm's income and impose joint and several liability on the partners.

Analysis: Section 44 is attracted where the business, profession or vocation carried on by a firm has been discontinued. The provision preserves the assessment machinery notwithstanding discontinuance and makes the persons who were partners at the time of discontinuance jointly and severally liable for the tax payable by the firm. The scheme of the Act distinguishes discontinuance of business from a mere change in constitution or succession, and mere dissolution without discontinuance would not by itself invoke section 44. On the facts, the firm's dissolution brought about discontinuance of its business, so the assessment notice was not without authority.

Conclusion: The section applied to the dissolved firm because its business had been discontinued, and the challenge to the notice failed.

Final Conclusion: The assessment notice was sustained, and the appeal was dismissed with costs.

Ratio Decidendi: Under section 44 of the Indian Income-tax Act, 1922, assessment may proceed against a firm after discontinuance of its business, even if the discontinuance results from dissolution, and the partners at the time of discontinuance are jointly and severally liable for the tax payable.

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