Reassessment of a dissolved firm is valid when the firm is treated as continuing and notice is served on one partner.

Section 44 of the Income-tax Act, 1922 treats a discontinued or dissolved firm as continuing for assessment and reassessment purposes, so the tax machinery may proceed despite dissolution. Section 63(1) governs notice service, and service on one partner where the notice is issued in the firm's name is valid; section 63(2) is not an exhaustive or mandatory restriction on that mode of service. On that basis, reassessment against the dissolved firm was upheld as lawful.

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Issues: Whether reassessment proceedings could validly be taken in the name of a dissolved firm under the Income-tax Act, 1922, and whether service of notice on one partner was sufficient.

Analysis: Section 44 of the Income-tax Act, 1922, creates a statutory fiction that a firm whose business has been discontinued is to be treated as continuing for the purpose of assessment under Chapter IV, so that the assessment or reassessment machinery may proceed notwithstanding dissolution. On the authority of the Supreme Court decisions relied upon, the liability is not confined to a fresh assessment only on individual partners; the firm may be assessed in the same manner as a continuing firm. Section 63(1) governs the mode of service of notice, and where the notice is issued to the firm and served on a partner, the service is valid. Section 63(2) merely permits the notice to the firm to be addressed to a partner and is not exhaustive or mandatory in the sense contended for by the assessee.

Conclusion: The reassessment proceedings were valid, and service of notice on one partner in the name of the firm was legally sufficient.

Final Conclusion: The assessment and reassessment made on the dissolved firm were upheld as lawful, and the reference was answered against the assessee.

Ratio Decidendi: For purposes of reassessment under section 44, a discontinued or dissolved firm is treated as continuing, and notice served on the firm through one partner is a valid mode of initiating proceedings under section 63.

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