TMI Blog1974 (8) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... an estimate of share income from the assessee-firm as the assessments on the partners had been completed on the 14th November, 1959. Therefore it appears that before the assessment on the firm, the assessments on the partners comprising the firm had been completed. In the premises, it was submitted that the ITO was incompetent to make the assessment on a firm after having chosen to make an assessment on the partners individually. This ground had not originally been taken in the grounds of appeal and the assessee submitted that he should be permitted to raise an additional ground of appeal to the following effect: "That the Income-tax Officer having made the assessments on the individual partners of the appellant firm and having thus exercised the option given to him by section 3 of the Income-tax Act, 1922, he was incompetent to make the assessment on the firm and the assessment is, therefore, void and should be annulled." It was urged that the additional ground involved a pure question of law which needed no investigation into facts, and in the interest of justice the assessee should be permitted to raise the said ground. The same was objected to by the revenue and the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partners had been assessed, there could not be assessment of the firm. In the aforesaid view of the matter, the Tribunal was of the opinion that even on the merits the additional ground sought to be raised by the assessee was liable to be rejected. In the premises, the Tribunal rejected the appeal on those grounds. In the aforesaid circumstances, under s. 66(1) of the Indian I.T. Act, 1922, the Tribunal has referred the two questions of law to this court, namely: "(1) Whether, on the facts and in the circumstances of this case, the Tribunal was right in declining to permit the assessee to raise the additional ground or let in any additional evidence sought to be introduced to support the ground ? (2) If the answer to the first question is in the negative, whether, on the facts and in the circumstances of this case, the Tribunal was right in holding that the assessment made on the firm was valid in law, when both the partners had already been assessed on their shares of profit derived from the firm ?" So far as the first question is concerned, it is well settled that whether to admit additional evidence or not is a matter, more or less for the Tribunal or an appellate c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the original assessment order could have been found without much difficulty and by calling for the original assessment order from the department and that would not have really, in the facts and circumstances of the case, amounted to investigation of such new facts which would have disentitled, in the interest of justice, admission of the additional ground. Therefore, though there was a discretion on the part of the Tribunal and strictly speaking and technically the original assessment order was not there and that there was a mistake in the assessment order in the names of the partners who had been assessed on the 14th November, 1959, we are of the opinion that these facts could have been easily found out from the records of the department and from that point of view it might be stated that it would have been a more proper exercise of the discretion on the part of the Tribunal to have admitted this additional ground. But, as mentioned before, normally, in a matter like this, the Tribunal has a discretion and from a strict legal point of view we would not say that in this case the discretion of the Tribunal was improperly exercised. The question No. 1, therefore, has to be answered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 as an unregistered firm." The position, however, has substantially altered since the amendment by the Finance Act, 1956. But we are not concerned with the said position in the relevant assessment year. Counsel for the assessee drew our attention to the relevant definition of a partner of a registered firm and an unregistered firm and also the firm under the Indian I.T. Act, 1922. He also drew our attention to the provisions of s. 14(2) and s. 35(5) and contended that the determination of tax liability was a procedural part and, therefore, the fact that in the case of an unregistered firm the liability might be different in respect of the partner from that in the case of a registered firm was merely a question of procedural rights of the parties and did not affect the liability to be charged under s. 3 of the Indian I.T. Act, 1922. Reliance in this connection was placed on several decisions, namely, in the case of CIT v. P. M. Bagchi Co. [1951] 20 ITR 33, 38 (Cal), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unregistered firm. it was further held that the ITO could not, however, seek to assess the one income twice--once in the hands of the partners and again in the hands of the unregistered firm. Counsel for the assessee contended that the authority of this decision was equally applicable to the case of a registered firm. Counsel submitted that s. 23(5) made certain procedural difference between a registered firm and an unregistered firm and even if in such a case the proviso to s. 23(5) gave an option to the ITO it had been held by the Supreme Court that once an option had been exercised by assessing an individual member of an unregistered firm, the firm itself could not be subsequently subjected to tax because that would, as the Supreme Court stated, amount to double taxation. Reliance in this connection was placed on the decision of the Supreme Court in the case of CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC) referred to hereinbefore. In this connection it is necessary to refer to the provisions of ss. 35(5) of the Act which provides as follows: "Where in respect of any completed assessment of a partner in a firm it is found on the assessment or reassessment of the firm or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Indian I.T. Act, 1922, was that the assessment proceedings with regard to a registered firm might continue for the purpose of computation and even for determining the share of the partners, the appropriate proceedings can be taken for rectification of the mistake, if any, in the assessment of the share income of the partners under s. 35(5) of the Act. Reference in this connection may be made to the decision of the Rajasthan High Court in the case of CIT v. Chaganlal Durga Prashad [1968] 70 ITR 314 (Raj) and the decision of the Madhya Pradesh High Court in the case of Kalekhan Mohd. Hanif v. CIT [1972] 86 ITR 196 (MP), but these decisions dealt with the position of sub-s. (5) of s. 23 as it stood after the amendment in 1956. But for the reasons mentioned before, we are of the opinion that the Tribunal on merits has come to a correct conclusion. In this connection, so far as the scope of s. 35(5) is concerned, we may note the decision in the case of ITO v. T. S. Devinatha Nadar [1968] 68 ITR 252 (SC). That case, however, dealt with the situation as to at what point of time the effect of s. 35(5) came into operation. Strictly speaking, the answer to the second question, in view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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