Genuine partnership firm income cannot be taxed in erstwhile family hands; only partner's share is assessable.

Where a partnership firm has already been found genuine and valid, the business income cannot continue to be assessed in the hands of the erstwhile Hindu undivided family on a protective basis merely because the business was earlier owned by it. The prior finding that the firm was entitled to registration displaced the premise that the entire income still belonged to the family, so only the assessee's share income from the firm was assessable in its hands.

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Issues: Whether the entire income from the partnership business could be assessed in the hands of the Hindu undivided family, or whether only the assessee's share income from the genuine firm was assessable.

Analysis: The business originally belonged to the Hindu undivided family and was later converted into a partnership firm. The firm had already been held to be a valid and genuine firm and entitled to registration in earlier proceedings. In view of that finding, the protective assessment made on the premise that the entire business income continued to belong to the Hindu undivided family could not stand. Only the share income attributable to the assessee in the genuine partnership firm was liable to be included in its hands.

Conclusion: The entire business income was not assessable in the hands of the assessee Hindu undivided family; only the share income from the firm was assessable, and the issue was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: Where a partnership firm has been finally found to be genuine and valid, its business income cannot be assessed in the hands of the erstwhile owner on a protective basis merely because the business was previously carried on by that entity; only the partner's share income is assessable.

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