Income-tax claims in liquidation follow the assessment order, while liquidation does not suspend tax liability or return filing duties.

Where a statute provides a complete machinery for assessment and challenge, tax liability cannot be re-opened collaterally in liquidation proceedings; the assessment order itself is sufficient proof of the income-tax claim. A company in liquidation remains liable to income-tax, and the liquidator may be required to file the statutory return on its behalf. The tax claimant is not barred by proof-time limits from participating in later undistributed assets, but cannot disturb dividends already distributed before proof.

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Issues: (i) Whether a liquidation court can require the income-tax authorities to prove their tax claim otherwise than by producing the assessment order; (ii) whether a company in liquidation remains liable to income-tax and the liquidator can be called upon to file the statutory return; (iii) whether an income-tax claimant is confined to dividends declared after proof of the claim.

Issue (i): Whether a liquidation court can require the income-tax authorities to prove their tax claim otherwise than by producing the assessment order.

Analysis: The Income-tax Act was treated as a complete code providing a self-contained machinery for assessment, appeal, reference, revision, and rectification. On that scheme, assessment disputes had to be pursued only through the remedies created by the Act. The court held that the jurisdiction of civil courts and, by necessary implication, proceedings in liquidation could not be used to re-open or test the correctness of an income-tax assessment. The assessment order itself was sufficient proof of the claim in liquidation, and the earlier contrary view was overruled.

Conclusion: The liquidation court cannot require the income-tax authorities to prove the assessment de novo; production of the assessment order is sufficient.

Issue (ii): Whether a company in liquidation remains liable to income-tax and the liquidator can be called upon to file the statutory return.

Analysis: A company does not cease to be an assessee merely because it is under winding up. The statutory definition of company and the charging provisions continued to apply, and the liquidator represented the company for tax purposes. The existence of liquidation did not divest the income-tax authorities of power to assess or require returns in the manner provided by the Act.

Conclusion: A company in liquidation remains liable to income-tax, and the liquidator may be required to submit the return under the Act.

Issue (iii): Whether an income-tax claimant is confined to dividends declared after proof of the claim.

Analysis: The time fixed by the liquidation court for proof of debts only excluded a creditor from distributions already made before proof. It did not extinguish the debt or bar participation in assets still undistributed. The claimant could participate in later distributions without disturbing dividends already declared or paid.

Conclusion: The income-tax authorities could share only in dividends declared after proof and not in dividends already distributed.

Final Conclusion: The decision affirms the supremacy of the statutory income-tax machinery over collateral challenges in liquidation, holds that liquidation does not suspend tax liability, and limits the tax claimant's participation to undistributed assets.

Ratio Decidendi: Where a statute provides a complete and exclusive machinery for determining tax liability, that liability cannot be questioned collaterally in liquidation proceedings, and the assessment order is sufficient proof of the tax claim.

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