Law: Income Tax Act, 1961

Section: 256

Income-tax----Assessment---Protective assessment---Doubt as to which person amongst 'two to be assessed---Parallel proceedings may be taken against both and alternative assessments framed---Protective assessment permissible but Appellate Authorities cannot make protective order-Assessment in respect of disputed income upheld in hands of assessee's husband by High Court--­Tribunal justified in cancelling assessment made on assessee. It is settled that when there is a doubt as to which person amongst the two was liable to be assesseed, parallel proceedings may be taken against both and alternative assessments may also be framed. It is, also equally true that while a protective assessment is permissible, it is not open to the income-tax appellate authorities constituted under the Act to make a protective order. The law does not permit assessment of the same income successively in different hands. The tax can only be levied and collected in the hands of the person who has really earned the income and is liable to pay tax thereon. The assessee in respect of the assessment year 1973-74 filed her return of income in the status of an individual showing an income of Rs.1,792 from a proprietary business for the period April 1, 1972 to May 27, 1972. She also returned an amount of Rs.32,854 as share income from a partnership business carried on in the name of a firm, F.A. The business that was carried on by the firm was the proprietary business of the assessee before May 27, 1972. During the course of the assessment proceedings for the aforesaid assessment year, the Income-tax Officer found that the assessee was only a benamidar of her husband who was the real owner of the business, F.A, so long as it was the proprietary business of the assessee and thereafter, it was he who actually was a partner in the firm through his wife, namely, the assessee. Consequently, the Income-tax Officer held that the entire determined share income of the assessee in the registered firm as well as the income for the period the business was a proprietary concern during the previous year relevant to the assessment year had to be clubbed with the income of her husband and assessed in his hands.…

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