Double assessment of the same income is impermissible; co-ordinate Benches must follow binding precedent unless per incuriam applies narrowly.

Section 4 of the Income-tax Act, 1961 was held to preserve the same charging scheme as the earlier Act, and the machinery provisions permitted assessment either of an unregistered firm or of its partners on the same income, but not both. Double assessment of identical income in the hands of both entities was therefore impermissible, and the firm's assessment after the partners had been assessed was invalid. On precedent, a co-ordinate Division Bench was required to follow an earlier binding Division Bench decision unless it had been overruled by a higher court or a larger Bench; disagreement alone did not justify departure, and per incuriam applied only where binding authority or a statutory provision had been ignored.

---

---

Issues: (i) Whether, under section 4 of the Income-tax Act, 1961, the Assessing Officer could assess the unregistered firm after assessing the partners individually on the same income. (ii) Whether a co-ordinate Division Bench can depart from an earlier Division Bench decision and when the doctrine of per incuriam can be applied.

Issue (i): Whether, under section 4 of the Income-tax Act, 1961, the Assessing Officer could assess the unregistered firm after assessing the partners individually on the same income.

Analysis: Section 4 of the Income-tax Act, 1961 was held to correspond in substance with section 3 of the Indian Income-tax Act, 1922. The substitution of the word "person" and the definition in section 2(31) did not alter the charging scheme. The machinery provisions, including section 183, showed that the Assessing Officer had an option either to assess the unregistered firm or to assess the partners individually, but not both on the same income. The Court held that the Act did not authorize double assessment of the same income in the hands of both the firm and the partners.

Conclusion: The assessment of the unregistered firm after the partners had been assessed on the same income was invalid; the question was answered against the Revenue and in favour of the assessee.

Issue (ii): Whether a co-ordinate Division Bench can depart from an earlier Division Bench decision and when the doctrine of per incuriam can be applied.

Analysis: The Court reaffirmed the hierarchy of precedent and the duty of co-ordinate Benches to follow earlier binding decisions unless the earlier view has been overruled by a higher court or a Full Bench. A later co-ordinate Bench cannot treat an earlier judgment as per incuriam merely because it disagrees with the reasoning or conclusion. Per incuriam applies only in the limited situation where a decision is rendered in ignorance of a binding authority or a statutory provision having statutory force. If a Bench doubts an earlier co-ordinate decision, the proper course is reference to a larger Bench.

Conclusion: A co-ordinate Division Bench may not depart from an earlier binding decision on its own view of correctness, and the doctrine of per incuriam has limited application.

Final Conclusion: The reference was answered by holding that the charging scheme under the new Act did not permit simultaneous assessment of the same income in both the unregistered firm and its partners, and the law of precedent requires co-ordinate Benches to seek authoritative resolution rather than disregard earlier binding rulings.

Ratio Decidendi: Where the statute leaves an option to assess either of two distinct taxable entities on the same income, the Assessing Officer cannot assess both entities on that very income, and a co-ordinate Bench cannot decline to follow an earlier binding decision except in the narrow circumstances recognised for per incuriam or overruling by a higher authority.

---