TMI Blog1976 (11) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... l Chand of Baba Bakala has five partners. Out of them Lal Chand and Sohan Lal were assessed to income-tax on February 5, 1968, in their individual capacity in respect of their income from the firm for the assessment year 1963-64. The Income-tax Officer simultaneously proceeded to assess the firm, vide separate order dated 26th March, 1968, for the same year. The assessee-firm raised an objection that when the partners have been assessed in their individual capacity for their share income in the firm, the firm could not be legally assessed separately. Their appeals before the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal failed. The assessee-firm then approached this court. On a direction from this court the above-qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of, this Act in respect of the total income of the previous year or previous years, as the case may be, of every person ........" Unlike its counterpart in the old Act, section 4 of the new Act does not contain in its body the description of the assessable entities. It only prescribes "the person" for the purpose of tax, which has been further described and classified in section 2(31) of the new Act and is in the following terms : " 'person' includes- (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the prece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the firm or the association of persons and the word "or" playing a vital role in giving the option to the assessing authority to either assess the firm, association of persons or partnership or members individually was eliminated from the charging section. A comparative study of both the charging sections, that is, the old and the new, shows that the area of operation has now been widened against a taxable entity which has escaped assessment. The machinery sections of the new Act will come into play for the purpose of assessment of a taxable entity in view of the guidelines provided by a charging section. In my view, the scheme of the Act does not permit the argument, as advanced by Mr. Kohli, advocate, on behalf of the assessee-firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the word "or" as contained in section 3 of the old Act about the option of the assessing authority to assess the firm or its partners, association of persons or its members individually. These judgments are not of much help in the interpretation of the provisions of section 4 of the new Act and, thus, do not render any assistance for determination of the question involved in the reference. Counsel for the parties are agreed that there are only two cases so far reported under the new Act having a direct bearing on the point in issue. Both these cases are decided by two Division Benches of the Patna High Court and in both these cases the Benches have taken diametrically opposite views. The first case is Pure Nichitpur Colliery Company's cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, by a different Bench. In this case a view just opposite to Pure Nichitpur Colliery Company's case [1975] 101 ITR 79 (Pat) has been taken holding that it is no longer permissible to the assessing authority to elect between a firm, association of persons or its partners or members. The Bench observed as under : " In the cases referred to above, in the terms of section 3 of the Indian Income-tax Act, 1922, it was held that the Income-tax Officer had the option to assess either of the two units of assessment and once having exercised the option to assess one unit, it was not open to him to assess the other unit. In the charging section 4 of the Income-tax Act, 1961, no such option of election between the two taxable units has been given to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahendra Kumar Agrawalla's case [1976] 103 ITR 688 (Pat), in my view, has correctly determined the law on the point. In view of what has been said and discussed above agreeing with the decision in Mahendra Kumar Agrawalla's case [1976] 103 ITR 688 (Pat), I am to hold that there is no prohibition in section 4 of the new Act to restrain the assessing authority to proceed against the firm which is a taxable entity in respect of the fact that two of its partners had been separately assessed in respect of their share of the income from the partnership business. The position that once the income of an entity has been assessed and taxed in the hands of other taxable entities referred to in section 3 of the old Act no tax could be levied on the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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