RODAMAL LALCHAND Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question formulated for reference under section 256 (2) of the Income-tax Act referred to this court is as under :

(2.) THE facts giving rise to this reference are that firm Rodamal Lal 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-quoted reference was made under section 256 (2) of the income-tax Act.

(3.) THE learned counsel for the assessee-firm cited two decisions of the Supreme Court in Commissioner of Income-tax v. Kanpur Coal Syndicate, 1964 53 ITR 225 and commissioner of Income-tax v. Murlidhar Jhawar and Purna Ginning and Pressing Factory, 1966 60 ITR 95 to support his arguments that the assessing authority after the assessment of the partners could not proceed to assess the firm. THEse cases were decided under the old Act and had interpreted 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 authority to assess the firm or its partners, association of persons or its members individually. THEse judgments are not to 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.