TMI Blog1980 (10) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... avjibhai, Ratilal Mavjibhai and Ramjibhai Mavjibhai. All the four partners had equal shares. Up to the assessment year 1967-68, the assessee-firm was assessed to tax in the status of a registered firm. For the assessment year under reference, that is, assessment year 1968-69, the assessee-firm filed Form No. 12 required to be filed under s. 184(7) of the I.T. Act, 1961, for the grant of renewal of registration. This Form was signed by three partners, namely, Laxmichand, Ratilal and Amratlal but Ramjibhai Mavjibhai did not sign the form for renewal, being Form No. 12. This was noticed by the ITO and he gave several opportunities to the assessee-firm so that Ramjibhai Mavjibhai could sign the form but due to disputes amongst the partners it was not possible for the other three partners to get Ramjibhai Mavjibhai to sign Form No. 12. The ITO, therefore, declined to allow continuance of the registration to the firm and assessed the firm in the status of an unregistered firm. The assessee-firm carried the matter in appeal to the AAC and there it was pointed out on behalf of the assessee that assessment of the firm was completed on March 30, 1973, in the status of an unregistered firm. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC), what happened was that three partners who carried on business in groundnut, cotton and cotton seed, were each assessed to tax on a third share in Rs. 51,280, computed as profits of the business for the assessment year 1954-55. Thereafter, the ITO assessed them in the status of an unregistered firm computing the income of the joint venture at Rs. 80,925. The Tribunal held that the ITO had the option to assess the individual parties to the joint venture and, he having exercised that option, it was not open to him thereafter to reassess the same income collectively in the hands of the three parties to the joint venture in the status of an unregistered firm. It was held by the Supreme Court on these facts that the partners of an unregistered firm might be assessed individually or they might be assessed collectively in the status of an unregistered firm ; the ITO could not, however, seek to assess the same income twice-once in the hands of the partners and again in the hands of the unregistered firm. Thus, this decision of the Supreme Court is based on the well-settled position in law that the same income cannot be subjected to income tax twice. Income in that particular case was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer, the Income-tax Officer assessing the partners can proceed with their assessments and include their share in the firm, accordingly. The share so included can later be modified by the Income-tax Officer under section 155 after the firm's assessment or reassessment has been made." (Emphasis supplied). It must be pointed out that the directions given by this circular were regarding the steps to be taken by the ITO when dealing with the assessment of a firm and also the assessment of the individual cases of the partners of the firm. But the reasoning which went into this circular and the directions of the Board was that the provisions of the 1922 Act were on the same lines as the provisions of the I.T. Act, 1961. At the time when the Board issued this circular, the 1961 Act was already on the statute book and had been in force since 1st April, 1962. It was in the context of the I.T. Act, 1961, that the Board directed the ITOs to follow the particular procedure mentioned in the Board's circular so as to avoid any complications and so as to see to it that an unregistered firm would not escape assessment as an unregistered firm because one of the partners of the unregistered fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere that the decision in Murlidhar Jhawar's case [1966] 60 ITR 95 (SC) would apply to assessments made under the Act of, 1961, and on the basis of that instruction, the Board issued directions as to how the ITOs should proceed with the assessments of firms so that the situation which arose in Murlidhar Jhawar's case [1966] 60 ITR 95 (SC) would not arise in a case dealt with under the Act of 1961. In State of Uttar Pradesh v. Raza Buland Sugar Co. Ltd. [1979] 118 ITR 50, the Supreme Court held that the principle that was applicable in tax statutes was that income was subject to tax in the hands of the same person only once. Thus, if an association or a firm was taxed in respect of its income the same income could not be charged again in the hands of the members individually and vice versa. Trust income could not be taxed in the hands of the settlor and also in the hands of the trustee or beneficiary or in the hands of both the trustees as well as the beneficiary. These principles were of course subject to any special provision enabling double taxation in the statute. In this case, the Supreme Court followed the earlier decision in Murlidhar Jhawar's case [1966] 60 ITR 95 (SC) and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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