GURTU, J. - (1.) THIS is a reference under section 66(1) of the Indian Income-tax Act. The assessee consisted of several persons who combined together with the object of purchasing coal to supply the same to customers for domestic purposes and to other small scale industries. The finding of the Tribunal is that the several persons constituted an association of persons within the meaning of section 3 of the Income-tax Act. The request to refer the question whether the several persons who had so combined, did or did not so constitute an association, was refused by the Tribunal. In this reference, therefore, we start with the position that the assessee is an association of persons.
(2.) THE Income-tax Officer assessed the assessee to income-tax under section 23(3) of the Act. THEre is no dispute as to the quantum of the total income computed by the said officer. THE tax was levied upon the total income in the hands of the said association of persons (the assessee). THE assessee, however, claimed that under section 3 of the Indian Income-tax Act, the Income-tax Officer had a discretion to levy the tax either upon the association of persons as a unit, or on the members individually upon their proportionate income, and that, therefore, in the circumstances of the case and in the interests of justice, the proportionate income should have been assessed in the hands of the individual members. THE Income-tax Officer refused to accept that contention as also did the Appellate Assistant Commissioner. In due course an appeal came up before the Tribunal and the assessee agitated this point before it. THE Tribunal held that although the Income-tax Officer might have assessed separately the proportionate income of the individual members, as the said officer assessed the total income as that of that of an association of persons the Tribunal had no power under the Act to direct the Income-tax Officer to assess the proportionate individual income of the members separately. Having regard to this view of the Tribunal request was made to it under section 66(1) to refer and it has referred the following question of law to us : "If in pursuance to section 3 of the Indian Income-tax Act the Income-tax Officer levies the income-tax in respect of the total income of the previous year of an association of persons upon the said association of persons as a collective unit, whether the Tribunal is competent to direct the Income-tax Officer to levy the income-tax proportionately upon the individual members of the said association of persons proportionately in respect of the proportionate income of each of the members constituting the said association of persons proportionately in respect of the proportionate income of each of the members constituting the said associations of person ?" In order to answer this question we must refer to several sections of the Income-tax Act. Section 3 lays down as follows : "Where any Central Act enacts that income-tax shall be charged for any year at any rate or rates tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every.... firm and other association of persons.... or the members of the association individually."
(3.) IT is not in dispute that by virtue of this section there is a discretion vested in the Income-tax Officer to assess either the members of the association individually or to assess the association as such. Section 30 allows any assessee who, inter alia, denies his liability to be assessed under the Act, to appeal to the Appellate Assistant Commissioner against the assessment made on him by the Income-tax Officer.;