HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Hyderabad v. Sri Rajareddy Mallaram
Civil Appeal No. 290 of 1963
[1964] 5 SCR 508 ·
Indian Income-tax Act, 1922: sections 22(1), 22(4), 23(4), 27, 34, 44 and 63(2)
Sources & disclosures includedDownload original judgment / order
Three-judge bench; unanimous judgment delivered by J. C. Shah, J. · A. K. Sarkar, J. · M. Hidayatullah, J. · J. C. Shah, J.
Assessment years: Fasli year 1358 (1 October 1948 to 30 September 1949); assessment year not expressly stated in the report
01 · Facts of the case
Baba Gowd, P. V. Rajareddy and Rajareddy Mallaram carried on liquor-contract business as the Nizamabad Group Liquor Shops during Fasli year 1358. When the contracts ended, the business was discontinued and the association dissolved. No return was filed. The Income-tax Officer served a section 34 notice on Baba Gowd, who did not comply, and assessed the association under section 23(4) at taxable income of Rs.51,000 with tax of Rs.8,826-14-0. After recovery from Baba Gowd failed, a demand was issued to Rajareddy Mallaram. The Appellate Assistant Commissioner ordered cancellation and fresh assessment, but the Tribunal held the existing assessment valid. On reference, the Andhra Pradesh High Court held the assessment invalid and Mallaram not liable (PDF pp.3-5; SCR pp.510-512).
02 · Discussion by the Hon’ble Court
The Court read the pre-1958 section 44 as continuing the association's personality for assessment despite dissolution or discontinuance. Under Chapter IV, the income could be assessed either in the association as the unit or separately in each member's hands for that member's share; the Act did not create a collective assessment of members limited to those personally served. Consequently, there could be no partial association assessment confined to one noticed member. The words 'tax payable' referred to the tax the association would have been assessed to pay but for dissolution, and notice to the appropriate person under section 63(2) was sufficient for assessment of the continued statutory personality (PDF pp.6-9; SCR pp.513-516). The respondent's further objection that Baba Gowd was not the proper person for section 63(2) service was outside the Tribunal's order and the questions referred, so the Court did not decide it and proceeded on proper service (PDF p.9; SCR p.516).
03 · Judicial decision
The Supreme Court answered the first referred question in the negative: the section 23(4) assessment was not bad in law on the grounds considered. It answered the second question by holding the applicant liable for the tax payable under that assessment. The Revenue's appeal was allowed, and the respondent was directed to pay costs in the Supreme Court and the High Court (PDF p.9; SCR p.516).
04 · Outcome / in whose favour
In favour of Revenue: the historical assessment of the dissolved association remained valid on the referred questions, Rajareddy Mallaram was liable for the assessed tax, and the Revenue's appeal was allowed with costs. This was not a holding that any notice to any former member is always sufficient: the unreferenced challenge to Baba Gowd's status as the proper section 63(2) recipient was not adjudicated (PDF p.9; SCR p.516).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: in a dissolved-entity assessment, separate the statutory continuation of the taxable unit from personal service and recovery questions. Identify whether the governing provision continues the entity for assessment, who is the prescribed recipient for service, and whether former members bear joint and several liability. Also preserve the reference boundary: this ruling assumed proper service on Baba Gowd because the contrary point was not referred. Use the decision only in its historical 1922 Act setting unless the equivalent successor provisions and later treatment are independently verified.
Source & verification
Download original judgment / order · Open cited source rendition
Full nine-page catalogue asset read in page-preserving text and visually inspected. PDF p.1 begins with the preceding Jivarajbhai Ujamshi Sheth disposition before the Rajareddy Mallaram title and headnote. The judicial opinion spans PDF pp.3-9 / SCR pp.510-516. Identity, date, docket, bench, author, statutory text and operative relief were verified. Exact source-hash, asset-ID, SCR-citation, docket, party and title searches found no same-judgment publication or disposition.
- Catalogue source 1964_5_508_516: SHA-256 e75fe826b48fc7cdcf40c78abe40fd87e84a1c13691716b657026ef02be7525a, 298642 bytes and nine pages; exact hash and page count verified.
- All nine pages were read in page-preserving text and visually inspected; the bounded judicial opinion is PDF pp.3-9 / SCR pp.510-516.
- No exact source-hash, asset-ID, SCR-citation, docket, party-name or title match was found in the current published corpus or source-disposition register.
- The source verifies identity, bench, statutory setting, reasoning and operative order; no later-treatment or current-law search is represented.
Statutory scope
Historical ruling on the Indian Income-tax Act, 1922 and the pre-1 April 1958 text of section 44. It is not a current-law ruling on assessment of discontinued entities, service, representative liability or recovery under the Income-tax Act, 1961 or the Income-tax Act, 2025.
Later treatment
Source checked 2026-10-11. Later judicial treatment and current statutory applicability have not been comprehensively checked; no current-law or citator clearance is represented.
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