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1996 (1) TMI 9 - SC - Income TaxAssessment on one of the partners of the assessee firm was completed with the specific statement that it would be rectified later - 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 - held that assessment made on the firm was valid.
Issues:
Assessment of an unregistered firm for the assessment year 1961-62. Analysis: The Supreme Court judgment dealt with the assessment of an unregistered firm for the assessment year 1961-62 under the Indian Income-tax Act, 1922. The firm did not apply for registration, leading to the Income-tax Officer treating it as an unregistered firm and assessing its total income at Rs. 59,623. The assessee contended that since a partner had already been assessed including his share income, the assessment on the firm was not permissible. The High Court had initially ruled in favor of the assessee based on a previous decision. However, the Supreme Court analyzed the facts and found that the Income-tax Officer assessing the firm was not aware of the partner's assessment, indicating that the option under the 1922 Act was not exercised. This led to the conclusion that the assessment on the firm was not invalid. The Supreme Court referred to the case law under the 1922 Act, emphasizing that the Income-tax Officer had the option to tax either the partners or the firm but could not tax the same income in both cases. In this specific case, the assessment on the partner was completed before the assessment on the firm, and there was no indication in the firm's assessment order that the partner had already been assessed. The court concluded that the Income-tax Officer had not exercised the option under the 1922 Act, making the assessment on the firm valid. The Supreme Court highlighted that the decision rested on the inference drawn from the facts found by the Tribunal, which the High Court did not disturb. The court found the Tribunal's opinion sound and valid, ultimately allowing the appeal, setting aside the High Court's judgment, and ruling in favor of the Revenue and against the assessee. The judgment concluded that the assessment on the firm was not invalid, and no costs were awarded in this matter.
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