Case: The Income Tax Officer, Gorakhpur Vs. Ram Prasad &amp; Others

person to whose business this Act applies." 5. There is no provision in the Act similar to Section 25-A of the Indian Income-tax Act, 1922. 6. The learned Counsel for the appellant contended that in the case of Excess Profit Tax, the tax is levied on the business and not on any individual and therefore what is relevant is the continuation of the business and not the continuity of the identity of the assessee. According to him if the business in question continues as in the case before us, then the fact that the identity of the person who is continuing the business has changed is not relevant. In support of this contention be relied on the language of Section 4 of the Act. It will be noticed that the proviso to that section refers to Section 4 (3) of the Indian Income-tax Act, 1922 and the body of the section itself refers to the assessments in respect of any business to which the Act applies, to be charged, levied and paid on the amount by which the profits during any chargeable accounting period exceeds the standard profits. The word "paid" in the context can only refer to the person. That is a clear indication that the Act contemplates assessment of the tax on a person though on the basis of the profits from a business. This conclusion receives support from Section 5 of the Act which states that the Act is to apply to every business of which any part of the profits made during the chargeable accounting period is chargeable to income-tax under the provisions of sub-cl. (1), sub-clause (2) of cl. (b) of sub-section (1) of Section 4 of the Indian Income-tax Act, 1922 or of clause (c) of that sub-section. No doubt the basis of the assessment is not the receipt of the profits but the accrual, whether it accrued to a resident or non-resident and whether the accrual was within or without British India in the same manner as under the Indian Income-tax Act, 1922. As observed by the High Court of Madras in Commr. of Excess Profits Tax, Madras v. Jivraj Topun and Sons, Madras, (1951) 20 ITR 143 (Mad) :"The point however is put beyond doubt by Section 14, sub-sec. (1) of the Act which provides for assessment of the tax after the return is submitted in pursuance of a notice issued under Section 13 of the Act. It requires that the Excess Profits Tax Officer, after completing the assessment should furnish "a copy of such order (that is the assessment order) to the person on whom the assessment has been made". Sub-section (2) of that section imposes the liability to pay on the person carrying on the business in that period. Under sub-section (3) if the business is carried on jointly during the chargeable accounting period, the assessment should be made upon the persons jointly and in the case of a partnership it should be in the name of partnership. Under sub-section (4) if a person could be assessed either solely or jointly with other person or persons, in case of his death, the assessment may be made on the legal representative either solely, or jointly with the other person or persons. The provisions of this section therefore place the matter beyond doubt that the assessment of the tax is on the person in the same manner as under the Income-tax Act. No doubt under the Income-tax Act the computation of the tax is on the basis of the income derived by a person from various sources, while under the Excess Profits Tax Act it is on the profits of a business of the person." 7. We are in agreement with these observations. Consequently we are unable to uphold the contention that so long as the business continues, the change of the person who carries on the business is immaterial. 8. Next Mr. B. Sen, learned Counsel for the appellant sought to seek assistance from Section 44 of the Indian Income-tax Act, 1922 which section is one of the sections mentioned in Section 21 of the Act Section 44 of the Indian Income-tax Act, 1922 reads thus:"Where any business, profession or vocation carried on by a firm or association of persons has been discontinued or where an association of persons is dissolved, every person who was at the time of such discontinuance or dissolution a partner of such firm or a member of such association shall, in respect of the income, profits and gains of the firm or association, be jointly and severally liable to assessment under Chapter IV and for the amount of tax payable and all the provisions of Chapter IV shall, so far as may be, apply to any such assessment." 9. This provision applies only to firms and associations of persons. Hindu undivided family is neither a firm nor an association of persons. It is a separate entity by itself. That is made clear by Section 3 of the Indian Income-tax Act, 1922 which classifies the assessees under the heads "individuals", "Hindu undivided families", "companies"; "local authorities", "firms" and "other associations of persons"...If Hindu undivided family is to be considered as an association of persons, there was no point in making separate provision for the assessment of Hindu undivided family. This conclusion is strengthened by Section 25-A of the Indian Income-tax Act, 1922 which provides for the assessment of Hindu undivided family after its partition. 10.For whatever reason it may be, the legislature did not incude in Section 21 of the Act Section 25-A of the Indian Income-tax Act, 1922 nor did it make any similar provision in the Act. That being so, we agree with the High Court that the impugned notices were invalid. The same view was taken by the Madras High Court in Jivraj Topuns case, (1951) 20 ITR 143 (Mad) (supra) and the Allahabad High Court in Commr. of Income-tax, U. P. v. Neekelal Jainarain, 61 ITR 704 = (AIR 1966 All 338 ).

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]7. We are in agreement with these observations. Consequently we are unable to uphold the contention that so long as the business continues, the change of the person who carries on the business is immaterial8. Next Mr. B. Sen, learned Counsel for the appellant sought to seek assistance from Section 44 of the Indian Income-tax Act, 1922 which section is one of the sections mentioned in Section 21 of the Act Section 44 of the Indian Income-tax Act, 1922 reads thus:"Where any business, profession or vocation carried on by a firm or association of persons has been discontinued or where an association of persons is dissolved, every person who was at the time of such discontinuance or dissolution a partner of such firm or a member of such association shall, in respect of the income, profits and gains of the firm or association, be jointly and severally liable to assessment under Chapter IV and for the amount of tax payable and all the provisions of Chapter IV shall, so far as may be, apply to any such assessment."9. This provision applies only to firms and associations of persons. Hindu undivided family is neither a firm nor an association of persons. It is a separate entity by itself. That is made clear by Section 3 of the Indian Income-tax Act, 1922 which classifies the assessees under the heads "individuals", "Hindu undivided families", "companies"; "local authorities", "firms" and "other associations of persons"...If Hindu undivided family is to be considered as an association of persons, there was no point in making separate provision for the assessment of Hindu undivided family. This conclusion is strengthened by Section 25-A of the Indian Income-tax Act, 1922 which provides for the assessment of Hindu undivided family after its partition.