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Issues: Whether a partner of an unregistered firm can be assessed to income-tax on his share of profits before the firm itself is assessed, and whether the Act contains any express or implied prohibition against that course.
Analysis: The charging provision was read as authorising assessment of both firms and individual partners, and no provision was found imposing an express bar that the firm must be assessed first. The surrounding provisions dealing with previous year, deductions, computation of partners' shares, tax grossing up, loss set-off, and the special procedure for firms were held to show that prejudice may arise in particular cases, but not to establish a general rule or condition precedent requiring assessment of the unregistered firm before assessment of a partner. The Court further held that where no specific prejudice is shown, the department may proceed either against the firm or directly against the partner.
Conclusion: The assessment of the partner without first assessing the unregistered firm was held to be lawful, and the question referred was answered against the assessee and in favour of the Revenue.
Final Conclusion: The Act permits assessment of a partner's share of profits from an unregistered firm even where the firm has not first been assessed, unless the assessee shows a specific statutory prejudice.
Ratio Decidendi: In the absence of an express or implied statutory prohibition, and where no specific prejudice is shown, the income-tax authorities may assess either the unregistered firm or the partner directly for the partner's share of profits.
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