Business as unit of assessment allows notice to managing partner and supports recovery as arrears under tax enforcement machinery.

Under the Excess Profits Tax Act, the business was treated as the unit of assessment, so notice served on the managing partner was sufficient even though the firm was said to have been dissolved before the assessment order; the assessment was therefore valid. For recovery, section 21 of the Excess Profits Tax Act read the reference to an assessee as a person to whose business the Act applied, and the assessed tax remained recoverable as an arrear through section 46 of the Income-tax Act, 1922; the appellant could accordingly be treated as an assessee in default. The assessment and recovery proceedings were upheld.

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Issues: (i) Whether an excess profits tax assessment on a business carried on by a firm could be sustained where notice was served only on the managing partner, even though the firm was claimed to have been dissolved before the assessment order. (ii) Whether the assessed excess profits tax could be recovered under the coercive machinery of section 46 of the Income-tax Act, 1922, from the appellant on the footing that he was an assessee in default.

Issue (i): Whether an excess profits tax assessment on a business carried on by a firm could be sustained where notice was served only on the managing partner, even though the firm was claimed to have been dissolved before the assessment order.

Analysis: The assessment under the Excess Profits Tax Act, 1940, proceeded on the business and not merely on the continuing form of the partnership. The appellant had, by his own stand in earlier proceedings and correspondence, treated the dissolution question as unresolved and could not, at the assessment stage, deny the representative capacity of the managing partner. In any event, the statutory scheme treated the business as the unit of assessment and attracted the procedure applicable to a running business or, where necessary, to a dissolved firm, so that notice to the person managing the business during the relevant accounting periods was sufficient.

Conclusion: The notice served on the managing partner was valid and binding on the appellant, and the assessment was not vitiated.

Issue (ii): Whether the assessed excess profits tax could be recovered under the coercive machinery of section 46 of the Income-tax Act, 1922, from the appellant on the footing that he was an assessee in default.

Analysis: By virtue of section 21 of the Excess Profits Tax Act, 1940, the references to an assessee were to be read as references to a person to whose business that Act applied. The appellant, as a person liable in respect of that business, fell within that description. Service of demand on the managing partner was sufficient under the statutory scheme governing notices to a firm, and the amount remained an arrear recoverable through the coercive process. The appellant could therefore be treated as an assessee in default for recovery purposes.

Conclusion: Recovery under section 46 was competent, and the challenge to the recovery proceedings failed.

Final Conclusion: The assessment and the recovery proceedings were both upheld, and the appellant was not entitled to any writ relief.

Ratio Decidendi: Under the Excess Profits Tax Act, the business is the unit of assessment, and notice to the managing partner is sufficient to sustain assessment and subsequent recovery; where the statutory scheme treats the person connected with the business as an assessee, the tax becomes recoverable as an arrear under the coercive provisions of the Income-tax Act, 1922.

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