Dissolution of a firm does not halt income-tax assessment machinery; post-dissolution assessments remained valid.

Under section 44 of the Indian Income-tax Act, 1922, dissolution or discontinuance of a firm does not stop the assessment machinery, because the provision creates a legal fiction allowing assessment proceedings to continue as if no discontinuance had occurred. Applying settled Supreme Court authority, assessments made after dissolution were held valid, and they were not invalid merely because separate notices were not issued to all partners of the defunct firm.

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Issues: Whether assessments made on a firm for the relevant assessment years after its dissolution, without issuing separate notices to all partners of the defunct firm, were bad in law.

Analysis: The reference turned on the effect of the dissolution of a firm on pending and completed assessment proceedings under the Indian Income-tax Act, 1922. Section 44 was treated as creating a legal fiction by which the machinery of assessment continues notwithstanding discontinuance of the business or dissolution of the firm. The question had already been settled by Supreme Court authority holding that assessment proceedings may be commenced and continued against a firm as if discontinuance had not taken place, so that the tax liability machinery is not defeated by the firm's dissolution. That principle was applied to uphold the assessments in the present case.

Conclusion: The assessments were not invalid merely because they were made after dissolution of the firm without separate notices to all partners; the question was answered against the assessee and in favour of the Revenue.

Ratio Decidendi: Under section 44 of the Indian Income-tax Act, 1922, dissolution or discontinuance of a firm does not terminate the assessment machinery, and assessment proceedings may validly continue against the firm as if no discontinuance had occurred.

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