TMI Blog1979 (9) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... f persons otherwise called as unregistered firm was proper and legal, the members of the association or the partners as they are called, of this association or partnership having been assessed in respect of their share of income from this business of association of persons, otherwise called partnership earlier ? " In order to understand the scope of the question, we will briefly state the material facts admitted or found by the Tribunal which gave rise to the aforesaid question. The respondent-assessee is a firm constituted with 15 partners, consisting of 9 major partners and 6 minors admitted to the benefits of the partnership, under a deed of partnership dated July 16, 1955. One of the partners, Smt. Hussaini Begum, had died on October ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to him to tax the income collectively in the hands of the firm. The ITO, rejecting the plea of the assessee, completed the assessment on the same day, i.e., March 29, 1963, treating it as an unregistered firm. The appeals preferred by the assessee before the AAC against the orders of assessments as well as the order refusing registration under s. 26A passed by the ITO were unsuccessful. On further appeals, the Tribunal found that the ITO, before whom the assessment of the firm which had filed its return of income as early as on May 21, 1960, was pending, did not choose to make or complete the assessment of the firm but insisted on the partners filing their returns of income under s. 34 of the Act and the partners having filed their retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee contending, inter alia, that it is not open to the ITO to assess the respondent-firm in the status of an unregistered firm having already elected, to assess the same income in the hands of the individual partners. Under s. 3 of the Act income-tax shall be charged in respect of the total income of the previous year of every individual, HUF, company, local authority, firm, association of persons or the partners of the firm or the members of the association individually. The firm, be it registered or unregistered, is a separate and independent assessable entity. The partners of the firm and members of the association are also assessable units independently of the firm and association of persons. Therefore, a firm and the individ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of determining the sum payable by the firm itself, if, in his opinion, the aggregate amount of the tax including super-tax, if any, payable by the partners under. such procedure would be greater than the aggregate amount which would be payable by the firm and the partners individually if the firm were assessed, I as an unregistered firm. Section 23B provides for making provisional assessment in advance of regular assessment by the ITO at any time after the receipt of the return made under s. 22. The assessment under s. 23B, which is made in a summary manner, is a provisional assessment of the tax payable by the on the basis of his return. Section 23B(2) provides for a provisional assessment on a partner of the firm in respect of his shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they were not final but were only subject to rectification in the total income later on cannot be acceded to. This rectification of the assessment on the partner of a firm would be permitted if the real or true income is known subsequently after determining the 'assessment of the firm'. In the present case, the after share income of each of the partners of the firm is not in doubt. The income of each partner was known to the ITO at the time of the very assessments themselves since the return of income of the firm was filed even in May, 1960. The ITO has no authority to ignore the assessments already made on the partners under s. 23(1) and subsequently proceed to assess the respondent-firm in the status of an unregistered firm. It is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e thought that he could, in law, in the first instance, make an " assessment provisionally " of the three partners separately and then rectify the assessments later. It approved the finding of the Tribunal that once the option is exercised for assessing the individual partner and including his share of profits in the firm in his assessment, it is not open to the department to assess the same as income of the unregistered firm. The submission of Mr. Rama Rao that the unreported decision of this courtin R.C. No. 159/78, dated 21st February, 1979 (Deccan Bharat Khandsari Sugar Factory v. CIT [1980] 123 ITR 802) would support his plea cannot be acceded to. This unreported decision is distinguishable on facts. Therein, the Tribunal held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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