COMMISSIONER OF INCOME TAX Vs. B R CONSTRUCTIONS

JUDGEMENT

(1.) At the instance of the Commissioner of Income-tax, Andhra Pradesh-I, Hyderabad, the Income-tax Appellate Tribunal, Hyderabad, made this reference under section 256(1) of the Income-tax Act, 1961, for the opinion of the High Court on the following question of law :

(2.) When this reference came up before a Division Bench of this court, it referred the case to a Full Bench to resolve the difference of opinion expressed by two Division Benches in Ch. Atchaiah v. ITO [1979] 116 ITR 675 and Choudhary Brothers v. CIT [1986] 158 ITR 224. It, however, added these two questions for the opinion of the Full Bench :

(3.) First, we shall take up the question referred to this court by the Income-tax Appellate Tribunal. Here it would be appropriate to notice the facts giving rise to the said question. The assessee is a firm carrying on business in contracts. Its status was that of a registered firm till the assessment year 1967-68. As no declaration under section 184(7) in Form No. 12 was filed, the Income-tax Officer assessed the assessee as an unregistered firm for the assessment year 1968-69. Before the completion of assessment of the assessee, the assessments of some of the partners, taking their share income from the assessee into account, were completed, so the assessment of same income in the hands of the assessee was questioned before the Appellate Assistant Commissioner. It was urged before the appellate authority that the Income-tax Officer would be deemed to have exercised his option of assessing the income in the hands of the partners and as such he could not have assessed the same income over again in the hands of the assessee, an unregistered firm. The appeal was rejected. On further appeal, the Income-tax Appellate Tribunal accepted the said contention of the assessee and allowed the appeal. The Commissioner then got the above said question of law referred to the High Court.