Association of persons and double taxation principles barred fresh assessment of income already taxed once.

A voluntary combination formed for the common business purpose of distributing and selling khandsari sugar was treated as an association of persons because the members contributed capital, chose office-bearers, and carried on a separate business through the group. The same income, having already been assessed and taxed in the hands of the individual members, could not be assessed again in the hands of the association because the charging provision permitted only one lawful levy on that income. An assessment made contrary to that bar was jurisdictionally defective and could be quashed in writ jurisdiction by certiorari.

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Issues: (i) Whether the petitioners and others constituted an association of persons for income-tax purposes; (ii) whether the same income, having already been assessed and taxed in the hands of the individual members, could again be assessed in the hands of the association; (iii) whether the impugned assessments were liable to be quashed in writ jurisdiction for want of jurisdiction.

Issue (i): Whether the petitioners and others constituted an association of persons for income-tax purposes.

Analysis: The arrangement under which the petitioners joined for distribution and sale of khandsari sugar was not shown to be one of compulsion. They contributed capital, elected office-bearers, and carried on a separate business through the association. Those features showed a voluntary combination for a common business purpose and not a mere nominal or compelled grouping.

Conclusion: The petitioners did constitute an association of persons.

Issue (ii): Whether the same income, having already been assessed and taxed in the hands of the individual members, could again be assessed in the hands of the association.

Analysis: Section 3 of the Indian Income-tax Act was treated as the charging provision for a single levy on the relevant income. Once the income had already been assessed on the individual members under the statutory and tax had been realised, the same income could not lawfully be charged again in the hands of the association. The provisions concerning individual members and association income did not authorise repeated taxation of the same income.

Conclusion: The second assessment on the same income in the hands of the association was not permissible.

Issue (iii): Whether the impugned assessments were liable to be quashed in writ jurisdiction for want of jurisdiction.

Analysis: A writ of certiorari lies where an inferior authority acts without jurisdiction, in excess of jurisdiction, or in manifest disregard of the governing law. As the Income-tax Officer attempted to assess income that had already been validly charged and realised in the hands of the members, the action disclosed a jurisdictional defect and a manifest error on the face of the record.

Conclusion: The assessments were amenable to writ correction and liable to be quashed.

Final Conclusion: The petition succeeded because the impugned reassessment on the same income was ultra vires and the recovery proceedings based on it could not survive.

Ratio Decidendi: Where income has already been validly assessed and taxed once under the charging provision, the same income cannot be subjected to a fresh assessment in the hands of another taxable unit, and an assessment made in disregard of that bar is jurisdictionally defective and liable to be quashed in certiorari.

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