INCOME-TAX OFFICER, GORAKHPUR versus RAM PRASAD AND ORS.

Citation: [1973] 1 S.C.R. 1043 · Decided: 28-08-1972 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Dismissed
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Judgment (excerpt)

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1043 
INCOME-TAX OFFICER, GORAKHPUR 
v. 
RAM PRASAD AND ORS. 
Augusl 28, 1972 · 
IK. s. HEGDE, P. JAGANMOHAN REDDY AND H. R. KHANNA, JJ,] 
Indian Income-tax Act 1922-S. 14 and 44-The Excess Profits Tax 
Act 1940-S, 13(1)-Whether a H.U.F. ca11 be assessed for the purpose 
of 1xcess profi;s tax even after petition. 
Respondent l, the Karta, c:i.rrietl on the family business in the nan1c 
and •tyle of "Pam Nath Ram Prasad". The Income-Tax assessments for the 
aseCiSment year 1944-45 and the cxces profits tax aosess:'!1ent for the cor-
responding chargeable nccounting period ending on October 28, 1943 were 
•et aside by the Income-Tax Appellate Tribunal with the direction that fresh 
orders of assessment be made in accordance with the directions given hy 
tho Tribunal. 
On September 25, 1951, under a scheme for voluntary disclosure, the 
first responde~t disclosed by means 
of 
an 
application, 
a 
sum of 
Rs. 2,08,450/. and offered the same for taxation. 
On October !, 1951, the Hindu undivided family was disrupted and 
. there was a complete partition. Thereafter, fresh assessments to Income 
Tax were made ior the assessment years 1944-45 to 1947-48 taking into 
consideration the lfsclosure made by the 1st respondent. Subsequently, 
notiices were·W.ued under s. 13(1) of the Excess Profits Tax Act, 194-0 for 
certain chargeable accounting periods in the name of the first R.espondent. 
He tiled writ petitions challenginti the validity of the notices issued. 
The learned single Judge allowed the petitions holding that the appel· 
!ant was not competent to take proceedings under the ,.\ct in respect of a 
Hindu undivided family which hap been divided. 
On appeal,. the Divi-
sion Bench also upheld the decision of the learned single Judge. The 
appellant contended that ( 1) in the case of Excess Profits Tax Act, 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; (2) that under Section 44 of the Indian 
Income Tax Act 1922, a firm, or association of person, is jointly and 
severally liable to assessment and for the amount df tax payable. 
Dismissing the appeals, 
HELD: (I) Under s. 14 sub-section (3) of the Excess Profits Tu 
Act, if a business is carried on jointly during a 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 the partnenhip. 
Under Sub-Section ( 4), if a pe•son could be assessed either solely or 
jointly with other person or persons, in case of his death, the assessment 
may be made on his legal representative e:ther solely, or jointly with the 
other perso" or persons. The provisions of Section 14 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-lox 
Act, the computation of 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 bus;ness of the person". Therefore, the chan~e of 
the oenon who carries on hm'ness is very material so fa.r as the Execs' 
Profile Tax is concerned. [1048Dl 
1044 
SUPREME COURT REPORTS 
(1973] l S.C.R. 
Conunissioner of Excess Profits Tax, i\1adras v. Jh:araj 
Topun and 
Sons, Madras, 20 LT.It. 143, referred to. 
(ii) Sectior. 44 of the Ind:an Income Tax Act 1922, applies only to 
firms and associations of persons. 
I-Iindu undivided family is' neither a 
firm. nor an association of persons. 
It is a separate entity by itself. That 
1 
is made clear by s. 3 of •he Indian Income Tax Act 1922. 
Therefore, 
A 
s. 44 of the Act has no application to the 'facts and circumstances of the 
n 
cal;c and the impugned n·oticcs ,are invalid. [1049E] 
CIVIL APPELLATE JURISDICTION : 
C.A. Nos. 257 and 258 
oi: 1969. 
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Appeals .by special leave from the judgment and order dated 
July 11, 1967 of the Allahabad High Court in Special Appeal 
Nos. 319 and 320 of 1962. 
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B. Sen, P. L. Juneja, R. N .. <:·1chthey and S. P. Nayar, for the 
appellant. 
N. D. Karkhanis, and A. G. Rainaparkhi, for the respondents. 
The Judgment of the Court was delivered by 
Hegde, J. 
Aggrieved by the decision of the Allahabad High 
Court in Misc. Writ Petitions Nos. 1057 and 1059 of 1957, the 
Income-tax Officer, Gorakhpur has brought these appeals after 
obtaining special le
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