- (1.) The Calcutta High Court has answered the following question, referred at the instance of the assessee, in the negative i. e., in favour of the assessee and against the Revenue. "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessment of the assessee as an unregistered firm for the assessment year 1961-62 was proper -
(2.) The assessee is a firm. The assessment in question relates to Assessment Year 1961-62, governed by Indian Income-tax Act, 1922. Since it did not apply for registration, the Income-tax Officer completed the assessment treating the assessee as an unregistered firm. He computed the total income at Rs. 59,623/- which indluded the sum of Rs. 50,000/- as income from other sources which was agreed to by the assessee (See para 3 of statement of case). The assessee's appeal to Appellate Assistant Commissioner was dismissed and so was the further appeal to Tribunal. The main and only contention of the assessee before both the appellate authorites was : inasmuch as a partner of the assessee-firm, Sri Manoharlal, has been assessed on January 31, 1966 including his share income from the assessee-firm in his asset, the assessment made on assessee-firm on March 23, 1966 was to permissible. Both the appellate authorities rejected this contention. They pointed out that while the assessment of Manoharalal partner was made by Income-tax Officer 'A' Ward, Howrah, the assessment on the assessee-firm was made by the Income-tax Officer 'C' Ward, Howrah. They held that since the assessments on the partner and the firm were made by different Income-tax Officers and further because the Income-tax Officer making the assessment on partner mentioned clearly that he would rectify the assessment when he receives the share income report of the said partner from the Income-tax Officer assessing the firm, it cannot be said that the Income-tax Officer has exercised the discretion to tax the partner (as was permitted by the 1922 Act) or that the assessment on the firm was invalid in law on that account. The High Court has answered the question in favour of the assessee merely following their earlier decision on M/s. Hindustan Mill Stores Supply Company v. Commissioner of Income-tax, West Bengal (Income-tax Reference No. 10 of 1973). Though the High Court has noted elaborately the contentions of the counsel for both sides, it rested its decision exclusively on the aforesaid earlier (unreported) decision of that Court. Unfortunately, a copy of the said unreported decision is not made available to us. We are, therefore, unable to ascertain the precise reasoning on the basis of which the question has been answered by the High Court in the negative. We have, however, heard counsel for both the parties and we presume that in the opinion of the High Court, the assessment on the firm is invalid for the reason that the share income of a partner was included in his individual assessment which means that the Income-tax Officer has exercised the discretion, the option, available to him under the 1922 Act.
(3.) In Commissioner of Income-tax v. Atchaiah (Civil Appeal No. 2573 of 1977 delivered on December 11, 1995), this Court has dealt with the position of law relevant in this behalf both under the 1922 Act and the present Act. Under the 1922 Act, the Income-tax Officer had an option either to tax the partners of a firm or the firm with respect to the income of the firm but once he exercised his option one way, he could not obviously bring the same amount to tax in the hands of the other. Under the present Act, however, no such option is available to him. This appeal is governed by the 1922 Act, which means that the Income-tax Officer did have an option. The only question is whether he had exercised that option We think not. The assessment on the partner was completed earlier i. e., on January 31, 1966. That was done by the Income-tax Officer 'A' Ward while the assessment on the firm was made by the Income-tax Officer 'C' Ward, on March 23, 1966. The order of assessment dated January 31, 1966 on partner read : "Return filed, Notice u/S. 143 (2) complied with. It is stated by the assessee that all this business income is taken over by the firm M/s. Manoharlal Gupta and Company and his individual income is from that firm only. Assessee has shown his income at Rs. 982/-. This is accepted for the time being. It will be rectified when the report from the I. T. O. concerned is received.";