Law:

Section:

Section 184 of the Income-tax Act, 1961 [Corresponding to section 26A of the Indian Income-tax Act, 1922] - Firm - Assessed as such - Assessment year 1956-57 - Whether assessment of firm, after share income has been taxed in hands of partners, is not valid - Held, yes FACTS For the assessment year 1956-57, the ITO assessed the partners of the firm individually. Thereafter, he proceeded to assess the firm as such. The firm raised an objection that the assessment of the firm was not permissible in law after the assessment of the individual partners. This contention was overruled by the ITO. The firm applied for registration. That claim was rejected. The ITO proceeded to make the assessment on the footing that it was an unregistered firm. On second appeal on the question of registration, the Tribunal permitted registration of the firm. On the question of assessment, the assessee's appeal was dismissed. On reference : HELD In view of the decision of this Court in the cases of Joti Prasad Agarwal v. ITO [1959] 37 ITR 107 , Girdhari Lal Laxman Prasad v. CIT[1968] 70 ITR 853 and the Supreme Court in the case of CIT v. Murlidhar Jhawar & Purna Ginning & Pressing Factory [1966] 60 ITR 95 , it was held that the assessment of the firm, after the share income had been taxed in the hands of the partners, was not valid. Note : The case has been decided in favour of the assessee. CASES REFERRED TO CIT v. Murlidhar Jhawar & Purna Ginning & Pressing Factory [1966] 60 ITR 95 (SC), Jyoti Prasad Agarwal v. ITO [1959] 37 ITR 107 (All.) and Girdhari Lal Laxman Prasad v. CIT [1968] 70 ITR 853 (All.). JUDGMENT V.G. Oak, CJ.- The following two questions have been referred to this court by the Income-tax Appellate Tribunal, Allahabad : "1.Whether the assessment of the firm, after the share income had been taxed in the hands of the partners, was valid ? 2.Whether the assessment proceedings for the year 1956-57 could be validly initiated against the firm after its dissolution ?" Messrs. Hari Om Company, Kanpur (a dissolved firm), is the assessee. 1956-57 is the assessment year. In the first instance, the Income-tax Officer assessed the partners of the firm individually.…

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