Case: G. Ekambarappa &amp; Ors Vs. Excess Profits Tax Officer, Bellary

2. The appellants carried on a business constituting themselves into a partnership called "Guduthur Thimmappa and Brothers" in 1934. On the date of commencement of the business the partners were G. Thimmappa, G. Ekambarappa and G. Padmanabhan, each of the partners representing their respective joint families. The business of the firm was in Bellary town and the partners of the firm were residents of Bellary town during the period the firm was carrying on business. The firm was dissolved on October 16, 1944. Thimmappa, one of the partners, died on April 13, 1955. For the chargeable accounting period from October 30, 1943 to April 30, 1944, the Excess Profits Tax Officer had taken steps to assess the "escaped" profits of the firm. He issued the necessary notices to G. Padmanabhan and G. Ekambarappa as the partners of the dissolved firm He also issued notices to G. M. Prabhu and G. Lakshmidevamma as the representatives of G. Thimmappa. The contention of the appellants before the High Court was that as from November 1, l956 the Act must be deemed to have been repealed so far as Bellary district is concerned and, therefore, the respondent was not competent to take any proceedings for determining the escaped income under S. 15 of that Act. The High Court rejected the contention on the ground that, though the Act stood repealed by reason of the inclusion of Bellary district in Mysore State, the liability to pay tax on the escaped profits continued by virtue of S. 6 of the General Clauses Act.

Reasoning: In our opinion there is no justification for the argument put forward on behalf of the appellants. The result of the adaptation of Laws Order, 1956 so far as the Act was concerned, was that the provisions of that Act were no longer applicable or in force in Bellary diistrict. To put it differently, the Act was repealed so far as the area of Bellary district was concerned. Repeal of an Act means revocation or abrogation of the Act and, in our opinion, S. 6 of the General Clauses Act applies even in the case of a partial repeal or repeal of part of ando not think there is any substance in this argument. The liability of the appellants to tax arose immediately at the end of the chargeable accounting period and not merely at the time when it is quantified by assessment proceedings. It follows, therefore, that the notice issued under S. 15 of the Act was legally valid and the appellants representing the original partners of the firm continued to be liable to be proceeded against under that section for the profits which had escapedview of the principle expressed in these authoritieswe are of the opinion that the liability to pay excess profits tax accrued immediately at the end of the chargeable accounting period and that liability was preserved under Section 6 (c) of the General Clauses Act even though the Act stood repealed so far as Bellary district was concerned with effect from November 1,is great force in the argument advanced by Mr. Narasaraju on this point.But it is not necessary for us to express any concluded opinion on this aspect of the case because we have already given reasons for holding that the appeal must be dismissed on the ground that the Act stood repealed by reason of the adaptation of Laws Order, 1956 and the liability to pay tax on escaped profits continued under S. 6 of the General Clauses Act.