Double assessment of partnership income barred once the same income is finally taxed in all partners' hands.

An unregistered firm could not be assessed again on partnership income after the same income had already been finally assessed in the hands of all partners. The charging provision treated the firm and its partners as distinct assessable units, but the revenue could not exercise its option both ways in respect of the same income once it had chosen to tax the partners in full. Procedural provisions governing firm assessments and rectification of partners' assessments did not authorise a second substantive assessment of income already taxed. The assessment of the firm was therefore held improper and illegal.

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Issues: Whether the income of an unregistered firm could be assessed in the hands of the firm after the same income had already been assessed in the hands of all the partners.

Analysis: The charging provision treated a firm and its partners as distinct assessable units and gave the revenue an option to assess the income either in the hands of the firm or in the hands of the partners. That option could not be exercised both ways in respect of the same income once the department had finally chosen to assess the partners and had brought the entire partnership income to tax in their hands. The procedural provisions relating to assessment of firms and rectification of partners' assessments did not authorize a second substantive assessment of the same income in the hands of the firm. The contrary authorities were distinguished on facts and did not govern a case where the whole income had already been taxed in the hands of all partners.

Conclusion: The assessment of the unregistered firm was not proper and legal, and the question was answered in favour of the assessee.

Ratio Decidendi: Where the same partnership income has already been finally assessed in the hands of all partners, the revenue cannot again assess that income in the hands of the unregistered firm.

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