Court rules income not to be clubbed with husband's, emphasizes taxing actual earner to avoid double assessment.

The High Court ruled in favor of the respondent-assessee, holding that the income should not be clubbed with her husband's as it had already been assessed in his hands. The court emphasized that tax should be imposed on the individual who actually earned the income, prohibiting successive assessments of the same income in different hands. The previous judgment upholding the clubbing of income in the husband's hands was considered, leading to a decision in favor of the assessee and against the Department, with no costs awarded.

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Issues involved:
The judgment involves the legality of cancelling an assessment made in the case of an individual based on the return filed by her, and whether the income should be assessed in her hands or her husband's.

Assessment in the case of Smt. Durgawati Singh:
The respondent-assessee filed her return of income as an individual, showing income from a proprietary business and share income from a partnership business. The Income-tax Officer found that she was a benamidar of her husband, who was the real owner of the business. Consequently, the Officer held that the income should be clubbed with the husband's income. A protective assessment was completed in the assessee's hands. The Appellate Assistant Commissioner cancelled the protective assessment, stating that the income had already been assessed in the husband's hands. The Income-tax Appellate Tribunal upheld this decision, leading to a reference to the High Court.

Legal Principles:
The High Court noted that parallel proceedings can be taken against both parties when there is doubt about who should be assessed. While protective assessment is permissible, the law does not allow successive assessment of the same income in different hands. Tax should be levied on the person who actually earned the income.

Decision:
The High Court considered the previous judgment upholding the clubbing of income in the husband's hands. As the assessment in the husband's case was maintained, the disputed income could not be upheld in the assessee's hands. Therefore, the court answered the question in favor of the assessee and against the Department. No costs were awarded in this matter.

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