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PETITIONER: E.   M. MUTHAPPA CHETTIAR

       Vs.

RESPONDENT: THE INCOME-TAX OFFICER, SPECIALCIRCLE, COIMBATORE

DATE OF JUDGMENT: 21/09/1960

BENCH: AYYANGAR, N. RAJAGOPALA BENCH: AYYANGAR, N. RAJAGOPALA DAS, S.K. HIDAYATULLAH, M. GUPTA, K.C. DAS SHAH, J.C.

CITATION:  1961 AIR  204            1961 SCR  (1) 788

ACT: Excess  Profits  Tax-Assessment  by service  of  notices  on managing  Partner-Validity-If binding on the other  Partner- Tax,  if  can be recovered by  issue  of  certificate-Excess Profits  Tax  Act, 1940 (XV of 1940), ss. 8,  13,  21-Indian Income-tax Act, 1922 (XI of 1922), ss. 29, 44, 46(2).

HEADNOTE: The  firm consisting of the appellant and another,  carrying on managing agency business, was on March 31, 1951, assessed to  excess  profits  tax for the year 1942  and  the  broken period from January, 1943 to March 4, 1943.  The  prescribed notices  were served not on the appellant but on  the  other partner  who, under the terms of the partnership  deed,  was the  managing  partner.   On March  4,  1943,  the  managing partner gave notice of dissolution of the firm and thereupon the  appellant  sued him for dissolution from such  date  as might be specified by the court.  The trial Court upheld the dissolution  as and from the date notified by  the  managing partner  but  on  appeal  the High  Court  by  its  judgment rendered  in 1953 fixed March 10, 1949, as the date  of  the dissolution.  An appeal taken to the Supreme Court from this decision of the High Court was still pending.  The appellant challenged  the validity of the order of assessment and  the consequent  proceedings  for recovery of the  tax  assessed, under Art. 226 of the Constitution on the grounds, (a)  that there  was a dissolution of the firm on March 4,  1943,  and that notices served thereafter on the managing partner would not  bind him, (b) that there was no demand of the  tax  due from him under s. 29 of the Indian Income-tax Act and  that, consequently, the tax could not be recovered from him  under s.  46(2)  of  the Act, but the  High  Court  dismissed  his application. Held,  that  the appellant could not be allowed to  plead  a prior dissolution and the assessment was binding on him. Even  assuming that the partnership stood dissolved  on  the date of the assessment, his position would not be different. Under  the  Excess  Profits  Tax  Act,  1940,  the  unit  of assessment  was not the firm but the business, and an  order

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of  assessment passed after notice to the  managing  partner would  be valid and binding on the appellant under S. 44  of the Indian Income-tax Act, 1922, as modified by the  Central Board of Revenue under S.     21  of the Excess Profits  Tax Act, 1940. A.G. Pandu Rao v. Collector of Madras, (1954) 26 I.T.  R. 99  and Bose v. Manindra Lal Goswami, (1957) 33 I.T.R.  435, approved. 789 No  separate  notice  of demand under S. 29  of  the  Indian Income-tax Act, specifically addressed to the appellant, was necessary in order to recover the tax by the mode prescribed by  s. 46(2) of the Act.  Under the proviso to s. 21 of  the Excess Profits Tax Act, 1940, the appellant was an  assessee within  the meaning of s. 29 of the Indian  Income-tax  Act, 1922,  and  the  notice of demand  served  on  the  managing partner  was notice to the appellant by virtue of s.  63  of the latter Act made applicable by s. 21 of the former.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 107 of 1956. Appeal  by special leave from the judgment and  order  dated January 21, 1954, of the Madras High Court in W. P. No.  498 of 1952.                             With Petition No. 130 of 1958. Petition under Art. 32 of the Constitution of India for  the enforcement of Fundamental Rights. M.R. M. Abdul Karim and K. R. Choudhri, for the appellant (in C. A. No. 107156) and Petitioner (In Petn. 130/58). K.N. Rajagopala Sastri and D. Gupta, for the  respondents (in both the appeal and petition). 1960.   September  21.   The  Judgment  of  the  Court   was delivered by AYYANGAR J.-Muthappa Chettiar, the appellant in Civil Appeal 107  of  1956  was sought to be proceeded  against  for  the recovery from him of Excess Profits Tax assessed in  respect of the business of Muthappa & Co. of which he was a partner. He  disputed  the legality of the recovery  proceedings  and filed  Writ  Petition 498 of 1952 before the High  Court  of Madras for the issue of a writ of prohibition for  directing the Income-Tax Officer, E. P. T. Circle, Madras, not to take coercive  steps  against  him for the recovery  of  the  tax assessed.  This petition was dismissed and Civil Appeal  107 of  1956 has been filed on special leave obtained from  this Court.   During  the  hearing by the  High  Court,  of  Writ Petition  498  of  1952,  Muthappa  Chettiar  (referred   to hereafter  as  the  appellant) sought  also  to  impugn  the legality of the order of assessment to Excess lox 790 Profits  Tax.  The learned Judges held however that, such  a contention  was not germane to the writ of  prohibition  for which  he had prayed, adding also that there were no  merits in the grounds urged.  To avoid any     technical objection, the  appellant has filed in this Court Petition 130 of  1958 under Art. 32 of the Constitution in which the prayer is for the grant of a writ of certiorari or other appropriate  writ to quash the order of assessment to Excess Profits Tax,  and the  Appeal  and the Petition being thus  interrelated  have been heard together. We  shall first take up for consideration the matters  urged in  the Writ Petition, as logically having  precedence  over the  challenge  to the legality of the proceedings  for  the

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recovery of the tax.  The facts necessary to appreciate  the points urged are briefly these: The appellant and Thyagrajan Chettiar (impleaded as the second respondent in Civil Appeal 107  of 1956) were partners in a firm named Muthappa  &  Co. started  in  November, 1940, and the firm was  the  managing agent  of  a textile Mill called Saroja Mills Ltd.,  in  the Coimbatore   district.   The  assessment  which   is   under challenge  is for the Excess Profits Tax liability  of  this managing   agency  business  and  the  relevant   chargeable accounting periods are the calendar year 1942 and the broken period January 1, 1943, to March 4, 1943.  The liability  of the firm to Income-Tax for the same periods was assessed  by the  Income-Tax Officer by his orders dated March 15,  1948, by applying the provisions of s. 23(5)(b) of the  Income-tax Act, 1922, arid the appellant paid, when demanded, his share of  the tax and there is now no dispute about the  propriety of  that  assessment.   The income of  the  managing  agency business  was  computed for Excess Profits Tax at  the  same figure  as for assessment to Income Tax, and the  assessment for  the two chargeable accounting periods was completed  by the Excess Profits Tax Officer by his order dated March  31, 1951,  and  it is the validity of this order  of  assessment that is challenged in Petition 130 of 1958. The first matter urged in support of the petition may be set out thus: Ail assessment to be valid must                             791 be  after notice to the assessee.  In the present case,  the assessment   was  admittedly  completed  by   serving,   the prescribed   notices  on  Thyagrajan  Chettiar  alone,   who according  to  the  terms of  the  partnership  between  the parties  was  the managing partner.  But it was  urged  that there  had been a dissolution of the firm as and from  March 4,  1943, that thereafter the partnership ceased  to  exist, and with it the mutual agency between the partners, with the result that Thyagrajan Chettiar could not represent the firm which  had  ceased  to exist nor the  appellant.   On  these premises  it  was  submitted  that  the  assessment  of  the business  to  Excess  Profits  Tax  after  notices  only  to Thyagrajan Chettiar could not bind the firm nor at any  rate bind the appellant. In  our  opinion there are two answers to  this  submission, either  of  which would suffice to  reject  the  appellant’s plea:  (1)  That  on  the facts  of  the  present  case  the appellant is precluded from pleading that the firm had  been dissolved  at  the date of the assessment in 1951  and  from raising  any  objection to the representative  character  of Thyagrajan  Chettiar, (2) That on a proper  construction  of the provisions of the Excess Profits Tax Act, 1940, even  if the  firm  of  Muthappa & Co. should be held  to  have  been dissolved  before  1951  when the order  of  assessment  was passed,  the assessment of the managing agency  business  to Excess  Profits  Tax was properly and  legally  effected  by notice to Thyagrajan Chettiar. The  facts to which we have made reference are these:  Prior to the assessment year 1943-44, Thyagrajan Chettiar, as  the managing  partner of Muthappa & Co. was  submitting  returns for Income-tax and was conducting the assessment proceedings on behalf of the firm.  Thyagrajan Chettiar published in the newspaper  " Hindu " a notice announcing the dissolution  of the  firm as and from March 4, 1943, and followed it  up  by informing  the  Income  Tax Officer  of  this  circumstance. Thereafter  the  Income Tax Officer wrote to  the  appellant enquiring  whether  the  firm of Muthappa  &  Co.  had  been dissolved  and  if  so  from what  date.   By  letter  dated February 1, 1945, the appellant

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792 replied " I wish to inform you that Messrs.  Muthappa &  Co. has  been  formed  as  per the  deed  of  partnership  dated November  4, 1940, and the rights of the partners  are  also retracted  therein.  But Mr. Thyagrajan Chettiar my  partner has  acted deliberately beyond the scope of the  partnership deed in issuing a notice of dissolution of partnership on me on  March 4, 1943, and a suit has been filed against him  in the  Coimbatore Sub-Court and is pending.  Pending  disposal of  the said suit  regret I am unable to accept the  alleged dissolution   or  to  give  the  date  of   dissolution   of partnership  called  for  in  your  letter  ".  Taking   the appellant   at  his  word  the  income-tax  assessment   was completed  after  notice  to  Thyagrajan  Chettiar  as   the continuing  managing  partner.  In line  with  the  position taken up by him, disputing that the firm had been  dissolved by the acts or conduct of Thyagrajan Chettiar, the appellant filed  a suit in the Sub-Court at Coimbatore contesting  the validity  of  Thyagrajan Chettiar’s  notice  of  dissolution dated  March  4, 1943, praying for a  declaration  that  the purported dissolution of the firm by Thyagrajan Chettiar was invalid  and  inoperative,  himself  seeking  a  decree  for dissolution from a date to be specified by the Court and for rendition  of accounts on foot of a  subsisting  partnership till  the date so fixed.  The Subordinate Judge  upheld  the validity of the dissolution by Thyagrajan Chettiar in  1943. From this judgment rendered in 1948 the appellant  preferred an appeal to the High Court.  This appeal was heard in  1953 when the High Court allowed the appeal and fixed the date of dissolution  as  on  March 10, 1949.  It is  stated  that  a further  appeal  from  this judgment of the  High  Court  is pending in this Court, so that even now the precise date  on which the firm should be held to be dissolved is a matter of uncertainty. From the above it would be seen that it has always been  the case  of the appellant that the firm had not been  dissolved in 1943.  At the date of the proceedings for the  assessment to  Excess Profits Tax in 1951, with which Petition  130  of 1958  is concerned, the position therefore was  as  follows: The  assertion  by the appellant that  the  partnership  was undissolved                             793 and continued its existence, contained in his letter to  the Income  Tax Officer in February, 1945, still held  good  and was backed up by the proceedings he took in the Civil Courts to  maintain that stand.  No doubt, his claim had  not  been upheld  by the Subordinate Judge, but by the appeal that  he filed,  he rendered the matter res sub-judice and  till  the decision of the High Court in 1953, the appellant could  not obviously  suggest  any particular date as the date  of  the dissolution.   The  submission  of  learned  Counsel   which proceeds  on the assumption that there was a dissolution  of the  firm on March 4, 1943 ; or on March 10, 1949-which  was the  date fixed by the High Court by its judgment  of  1953, has   to  be  rejected  as  wholly  inconsistent  with   the contentions urged by the appellant in the Civil suit and the appeal  therefrom.   In the circumstances,  the  Income  Tax Officer  could  not be blamed for treating the  firm  as  in existence and similarly the Excess Profits Tax Officer also. It was common ground that at the date the Excess Profits Tax Officer  started proceedings for assessment,  the  appellant had filed an appeal against the judgment of the  Subordinate Judge  in O. S. 50 of 1946 and the same was pending  in  the High Court and that it was only in 1953 that the appeal  was disposed  of.  The contention now urged before us was,  that

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as  the High Court had held that the firm should be  treated as  having  been dissolved as and from March 10,  1949,  the issue  of any notice to Thyagrajan Chettiar as the  managing partner   of  the  firm  was  invalid  and  the   assessment proceedings  completed on that basis would also be  illegal. If the contention of the appellant were to prevail it  would mean that the validity or otherwise of the assessment  order would  be  retrospectively determined by the result  of  the appellant’s appeal which was pending before the High  Court, so  that if the High Court had held that the firm should  be treated  as  dissolved only on the date of its  judgment  in 1953,  the  assessment would be valid but that if  the  high Court bad fixed the date of dissolution on some date earlier than March 31, 1951, the assessment would be deemed invalid. This  argument has only to be stated to be  rejected.   When this 794 aspect  of  the matter was put to learned  Counsel  for  the appellant, he fairly conceded that he could not on the facts of  this  case  maintain  the position  that  the  order  of assessment to Excess Profits Tax was vitiated because of the alleged disruption of the firm of Muthappa & Co. before  the date of that order. The  other  answer to the submission is that  even  assuming that  the firm of Muthappa & Co. had been in fact  dissolved on  some  date anterior to the assessment  of  the  managing agency business to Excess Profits Tax, that would not affect the  validity of an assessment order passed after notice  to the  person  in  management  of  the  business  during   the chargeable  accounting periods, since, it was not  the  firm but  " the business " that was the unit of  assessment.   In this  connection learned Counsel for the appellant drew  our attention  to a decision of the Madras High Court in  A.  O. Pandu Rao v. Collector of Madras (1), and stated that it was against  him and directly covered the point and  if  correct would leave no scope for any further argument.  In that case a  firm  consisting of three partners  carried  on  business under  the  name of P. Nagoji Rao & Son, with  one  of  them Gannu  Rao as managing-partner.  The  chargeable  accounting periods concerned were the years from April 1, 1944 to March 31, 1946.  There were quarrels among the partners which  led to  the  filing  of  a  suit  on  February  26,  1947,   for dissolution and accounts by two of the partners against  the managing-partner.   The  suit was decreed  on  November  14, 1947,   declaring  the  firm  dissolved  as  and  from   the institution  of the suit-February 26, 1947.  The  assessment of  the  business  to Excess Profits Tax  was  completed  by notices  issued  subsequent  to that date to  Gannu  Rao  as managing-partner  and the order of assessment was passed  on December 31, 1949, and a notice of demand under s. 29 of the Income  Tax Act was served on him.  No demand  notices  were served  on the other two partners, but proceedings  for  the recovery of the tax were taken against them on the  strength of  the  notices served on Gannu Rao.   These  two  partners moved the High Court (1) (1954) 26 I.T.  99. 795 under Art. 226 of the Constitution for the issue of writs of Certiorari  to  quash  the orders of  assessment  to  Excess Profits Tax and the proceedings for recovery of the tax  due thereunder.   The  order of assessment was impugned  on  the around  that by virtue of the decree in the suit, there  had been  a  dissolution of the firm and that Gannu  Rao  having ceased to have authority to represent the firm or the  other partners,  the assessment could have been legally  completed

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only  by notices under s. 13 of the Excess Profits  Tax  Act being  served individually on the other partners,  and  that the  tax  could be recovered only after notices to  each  of them under s. 29 of the Income Tax Act.  The learned  Judges repelled these objections by reference to the provisions  of ss. 8 and 13 of the Excess Profits Tax Act under which it is the  " business " producing the income which is the unit  of assessment  for  Excess Profits Tax as contrasted  with  the provisions of the Indian Income tax Act under which the unit of  assessment  is either the  individual,  Hindu  undivided family, firm, company or association of persons, carrying on the  income-earning  activity (vide s. 3 of the  Income  Tax Act-which has not been made applicable to the Excess Profits Tax  Act  under  s.  21  of  the  latter  Act).   Under  the provisions   of  the  Excess  Profits  Tax  Act,   where   a partnership carrying on a business becomes disrupted and the Excess Profits earned by the business before its dissolution have  to be assessed the assessment has to be made under  s. 44 of the Income tax Act as modified by the Central Board of Revenue  under the power vested in that behalf by s.  21  of the Act and as so modified s. 44 runs: " Where any business carried on by a firm or association  of persons  has been discontinued, every person who was at  the time  of  such discontinuance a partner of such  firm  or  a member of such association shall, in respect of the  profits of the firm or association, be jointly and severally  liable to  assessment  under section 14 of the Excess  Profits  Tax Act,  1940, and for the amount of tax payable, and  all  the provisions of the said Act shall, so far as may be, apply to any such assessment." 796 The  effect  of this and other cognate provisions  was  thus explained by the learned Judges of the Madras High Court : "The  result  of s. 44 as amended by the  Central  Board  of Revenue  is  to  attract  the  procedure  applicable  to  an undissolved firm to a dissolved firm, and, therefore, if two or three persons carry on business as a firm, the assessment could be made on the partnership in the partnership name and the  persons,  who  carried  on  the  business  during   the chargeable  accounting period will be liable to pay the  tax as provided by sub-s. (2) of s. 14, read with s. 44, Income- tax Act, as modified by the Central Board of Revenue. As  s.  63,  Income-tax  Act, is  also  made  applicable  to proceedings under the Excess Profits Tax Act, if, during the chargeable  accounting period, the firm carried on  business as  an undissolved firm and even if it  became  subsequently dissolved,  by  virtue  of  the provisions  of  s.  44,  the assessment could be made as if it  were an undissolved firm. Under the provisions of s.    63,  Income-tax  Act,   notice under s. 13 may be issued     to and served on a partner  of a firm.  Section 63(2) says that " Any such notice or requisition may, in the case of a  firm or  a Hindu undivided family, be addressed to any member  of the  firm or to the manager or any adult male member of  the family  and in the case if any other association of  persons be addressed to the principal officer thereof" So  far as the assessment in the present case is  concerned, even  assuming  that  by the date notice  under  s.  13  was issued,  the firm became dissolved, the  machinery  provided under  the Act for the service of notice under s. 63 can  be availed  of  by  serving notice  on  the  partner.   Notice, therefore, to a partner is treated as notice to all." As observed by Chakravartti, C. J., in Bose v. Manindra  Lal Goswami (1): "  It will thus be seen that in the case of  excess  profits

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tax,  there  is no difference in the  method  of  assessment prescribed  for the assessment of the profits of  a  running business and that prescribed for (1) (1957) 33 I.T.R. 435, 447. 797 the assessment of the past profits of a business carried  on by  a  firm,  since dissolved.  In the  case  of  a  running business  too, the assessment is to be made on the  persons, carrying  on  the  business, jointly.  In the  case  of  the business  of  a firm which has been dissolved, it is  to  be made  on  the  partners jointly  and  severally;  and  since section  44 of the Act is made applicable to the  assessment of  pre-dissolution profits of the business of  a  dissolved firm,   such  assessment  can  obviously  be  made  in   the partnership  name.   It  was  obviously  in  view  of  these provisions that the learned Judge in the Madras case  stated that  even assuming that the firm had been dissolved by  the date of the issue of the notice under section 13, still, the machinery  provided  for by sections 13 and 14  of  the  Act could  be availed of and the partners would continue  to  be jointly and severally liable to assessment under section  14 of  the  Act  and  for  the  amount  of  tax  payable  after determination." In our opinion, the passages extracted correctly express the legal position resulting from the relevant provisions of the Excess Profits Tax Act, 1940.  We, therefore, hold that  the notice  served  on  Thyagrajan Chettiar was  valid  and  was binding  on  the appellant and that there is  no  basis  for challenging the legality of the assessment to Excess Profits Tax. Before leaving the question of the validity of this order of assessment  dated March 31, 1951, a minor point was made  to which it is necessary to advert.  The business income of the managing  agency  of  Muthappa & Co.  was  computed  at  Rs. 1,02,219 for the 1st chargeable accounting period, viz., the calender  year 1942, and at Rs. 6,387 for the broken  period January  1,  1943, to March 4, 1943.  These  figurers  which were the same as those in the assessment for income-tax were based on the remuneration to which the firm became  entitled on  its  managing agency agreement, with  the  Saroja  Mills Ltd., and with which amount the latter debited itself in its accounts.   The  company  however  did  not  disburse   this remuneration  in cash, but this would make no difference  to the  tax-liability  of the firm, since the  firm’s  accounts were 102 798 made  on the mercantile basis.  The Mills raised  a  dispute that  the managing agents had not fulfilled certain  of  the obligations undertaken by them in regard to the extension of the mills by increasing the spindle age, by reason of  which default  they claimed to have suffered a loss of income  and for. that reason carried    the amount  of their cross claim for damages to a suspense account, instead of crediting  the entire  amount of managing agency remuneration to the  firm. The sum of which immediate payment was thus withheld was Rs. 89,137.   At the time of the Income Tax assessment  for  the corresponding   period,  Thyagrajan  Chettiar-who   as   the managing-partner   of   the  firm  participated   in   these proceedings, had urged the contention that as the Mills  had withheld  remuneration to the extent of Rs. 89 thousand  odd and had not credited that amount to the managing agents, the sum  could not be treated as the income of the firm for  the assessment year.  This objection was overruled on the ground that the Mills had never disputed that the entire amount  of

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Rs. one lakh odd was due by them to the firm and in fact had claimed to deduct that entire sum as part of their  business expenditure.  The sum of Rs. one lakh odd was due by them to the  firm and in fact had claimed to deduct that entire  sum as  part of their business expenditure.  The sum of Rs.  one lakh  odd was therefore held to have accrued to the firm  as its  income  and  that  this  remained  unaffected  by   the existence  of  the cross claim.  The  contention  which  was repelled by the Income Tax Officer was addressed to us as  a ground  for disputing the inclusion of the Rs.  89  thousand odd  as  the income of the firm in its  Excess  Profits  Tax assessment.   We  see  no  substance  in  the  point  urged. Learned Counsel referred us to the decision of this Court in Commissioner  of  Income-tax,  Madras  v. K.  R.  M.  T.  T. Thiagaraja  Chetty & Co. (1) and to the observations  at  p. 261.  We consider that the decision far from supporting  the appellant is really against him. There are therefore no legal grounds for impugning (1) [1954] S.C.R. 258.                             799 the validity of the order of assessment to Excess Pro.  fits Tax dated March 15, 195 1, and we consider that. the same is binding  on the business and on the owners of that  business including the appellant.  As a result, Writ Petition 130  of 1958 fails and has to be dismiss. ed. The point that next calls for consideration is the   subject matter  of Civil Appeal 107 of 1956 and this is whether  the Excess Profits Tax assessed could be validly recovered  from the  appellant  by resort to the  machinery  for  collection provided by s. 46 of the Income Tax Act. The argument of learned Counsel for the appellant in  regard to this point ",as on the following lines: Sections 45 to 47 of the Income Tax Act, 1922, which provide for the recovery of Income-tax by coercive process, no doubt apply  for the recovery of Excess Profits Tax by  virtue  of their  inclusion in s. 21 of the Excess Profits Tax  Act  as provisions  applicable to the latter Act, and by  reason  of the  assessment on the firm of Muthappa & Co. the  appellant became  liable to pay the Excess Profits Tax  assessed.   It wag  nevertheless urged that the coercive process for  reco- very  of his tax liability under s. 46(2) of the Income  Tax Act  could  not  be  invoked  against  the  appellant,   the submission being rested on two propositions : (1) That   the appellant was not an " assessee " but only a " person liable to  pay the tax " within s. 29 of the Income  Tax  Act-which runs:  "When any (tax, penalty or interest) is due in  consequence of  any order passed under or in pursuance of this Act,  the Income-tax  Officer shall serve upon the assessee  or  other person  liable  to  pay such (tax, penalty  or  interest)  a notice  of demand in the prescribed form specifying the  sum so payable." It  was further urged that as in the present case there  had been  no notice of demand under s. 29 of the Income Tax  Act specifically addressed to and served on theappellant,   he could not become an " assessee in  default neither would the tax  payable  by  him become an arrear " as  to  permit  the invocation  of  the  coercive process  under  s.  46(2)  for recovery. (2) 800 That  the  procedure for recovery enacted in ss.  45  to  47 including  s. 46(2) were confined in their application to  " assessees  " and " assessees in default " and did not  apply to  the class of " other persons liable to pay the tax "  as against  whom the filing of a suit for the recovery  of  the

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tax and the execution of decrees in such  Suits was the only machinery  through  which the tax liability  of  this  class could be enforced.  For the purposes of this case we do  not consider  it  necessary  to  deal  with  the  larger  second question  as  to whether the expression " assessee "  and  " assessee in default " in ss. 45 & 46 of the Income Tax  Act, 1922,  should  be held to be confined to "  assessees  "  as distinguished from " other persons liable to pay such tax  " as  these expressions occur in s. 29 of the Act, or  whether the  expression " assessee " when it occurs in ss. 45 to  47 should  be understood as defined in s. 2(2) as  including  " every person by whom income-tax............... is payable ", since  we are clearly of the Opinion that the appellant  was an  " assessee ". Section 21 of the Excess Profits  Tax  Act carries a proviso which reads :    "Provided  that references in the said provisions to  the assessee shall be construed references to a person to  whose business this Act applies ". In  view of this provision the appellant as the  partner  of the " business " to which " this Act applies " would be " an assessee "and not merely an" other person liable to pay  the tax".   He  would also be an "assessee in default"  and  the amount  due from him would be an arrear since the notice  of demand  under s. 29 of the Income Tax Act was served on  the managing partner-Thyagrajan Chettiar, and such service would be tantamount to a notice served on the appellant himself by reason  of s. 63 of the Income Tax Act.  Indeed  the  entire basis  on which the assessment proceedings  completed  after notice  to  Thyagrajan Chettiar as the  managing-partner  of Muthappa  &  Co. have been held by us to be binding  on  the appellant  would preclude any argument of the type  advanced to  challenge the binding character of the  notices  served. The appellant was clearly an " assessee in default " within  801  s.46(1)  of  the Income-tax Act and the amount  of  tax  and  penalty due from him would be " an arrear within s. 46(2).  We  therefore hold that the proceedings for the recovery  of  the Excess Profits Tax could properly be taken and that  the  order of the High Court dismissing the appellant’s  petition  for the issue of a writ of prohibition was correct.  The appeal fails and is dismissed with costs.  The  petition  is also dismissed but as these two have been heard  together  there will be no order as to costs in the petition.  Both the Appeal and the Petition dismissed.