COMMISSIONER OF INCOME TAX BOMBAY SOUTH POONA Vs. MURLIDHAR JHAWAR AND PURNA GINNING AND PRESSING FACTORY DHARMABAD

JUDGEMENT

(1.) In the account year ending November 6, 1953 Murlidhar Jhawar, Panalal Lahoti and Govindbai carried on business in groundnut, cotton and cotton-seed. In the year of assessment 1954-55 the Income-tax Officer, Nanded brought to tax a third share in Rs. 51, 280 computed as profits from the business in the hands of each of the three parties, and thereafter he called upon Murlidhar to submit a return of the "income of the joint venture" on the footing that the parties thereto constituted an unregistered firm. Murlidhar complied with the requisition and submitted in November 1957 a return, but later applied to with draw it by application dated December 18, 1957. The Income-tax Officer rejected the application for withdrawal of return and completed the assessment of the three parties to the joint venture under S. 23 (3) of the Income-tax Act, 1922 in the status of an unregistered firm and computed the income of the joint venture at Rs. 80,925. In appeal to the Appellate Assistant Commissioner the order passed by the Income-tax Officer was confirmed. In second appeal, the Income-tax Appellate Tribunal set aside the order of the Appellate Assistant Commissioner. The Tribunal held that the Income-tax Officer 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. But on a concession made by counsel for the three parties, the Tribunal directed that the assessment be "rectified so as to restore the status quo ante."

(2.) The Tribunal submitted a statement of the case and referred the following question to the High Court of Judicature at Bombay:

(3.) Under S. 3 of the Indian Income-tax Act, income-tax is charged in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually. This Court in Commr. of Income-tax, U. P. v. Kanpur Coal Syndicate, (1964) 53 ITR (SC) 225:(AIR 1965 SC 325) observed at p. 228 (of ITR): (at p. 327 of AIR):