Law:

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Section 182 of the Income-tax Act, 1961 (Corresponding to section 23(5) of the Indian Income-tax Act, 1922) - Firm - Position prior to 1-4-1993 - Assessment years 1958-59 and 1959-60 - Whether in case of registered firm, assessment of individual partners does not preclude ITO from taking up assessment of firm as well - Held, yes FACTS For the assessment years 1958-59 and 1959-60 the assessments of the firm were taken up by the ITO. On appeal to the Tribunal a new ground was raised before it that inasmuch as the partners of the firm were individually assessed and inasmuch as the Income-tax Officer had exercised his discretion in assessing the partners in their individual capacity, he had lost jurisdiction to assess the partnership subsequently. The said contention was negatived by the Tribunal. On reference : HELD If section 3 of 1922 Act is read, with section 23(5) of 1922 Act in the case of a registered firm, both the firm as well as the individual partners are assessable entities, while in the case of an unregistered firm either the firm or the individual partners can be assessed. Naturally, in the case of an unregistered firm only the department is required to make a choice as to which entity should be proceeded against. This choice is not required to be made by the department in the case of a registered firm and its partners. In view of the above it was to be held in the instant case that the assessment of the individual partners did not preclude the Income-tax Officer from taking up the assessment of the firm as well. Note : The decision was in favour of the revenue. CASES REFERRED TO CIT v. Murlidhar Jhawar and Purna Ginning & Pressing Factory [1966] 60 ITR 95; 3 SCR 219 (SC), CIT v. Girdharilal Laxman Prasad [1968] 70 ITR 853 (All.) and Jain Bros. v. Union of India [1970] 77 ITR 107 (SC). JUDGMENT Bhave, J-he Income-tax Appellate Tribunal, Bombay Bench "A", has referred the following question for our decision: "Whether, on the facts and in the circumstances of the case, the assessments on the firm made after all the partners had been assessed first on the share income from the firm, were valid ?" Messrs. Kale Khan Mohd. Hanif, a firm registered under…

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