Association of persons assessment and reassessment validity upheld where common control and prior procedural limits defeated the taxpayer's challenge.

A business may be assessed as an association of persons where the evidence shows a common venture, unitary control and a profit-making purpose; on that material, a finding that no valid partnership existed was not perverse because it was supported by record evidence and a different view was possible but not ative. A challenge to reassessment under section 147 could not be entertained at the reference stage when the specific objection had not been permitted below and an earlier writ proceeding had already rejected the initial jurisdictional challenge. The assessment was thus upheld on both the character of the business and the validity of the reassessment initiation.

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Issues: (i) Whether the Tribunal's finding that no valid partnership was constituted and that the business was carried on by an association of persons was perverse; (ii) Whether the reassessment proceedings initiated under section 147 of the Income-tax Act, 1961 were valid.

Issue (i): Whether the Tribunal's finding that no valid partnership was constituted and that the business was carried on by an association of persons was perverse.

Analysis: The evidence included the partnership deed, the material relating to Tarachand's age, the final revisional order, and the surrounding circumstances showing that the business was carried on after the gift by the father as a joint venture under common control. The Tribunal was entitled to prefer the revenue material on record. A finding is not perverse merely because another view is possible. The record also supported the conclusion that the business was conducted with common purpose and unitary control, which is sufficient for assessment as an association of persons.

Conclusion: The finding was not perverse and was sustained. This issue was decided against the assessee and in favour of the Revenue.

Issue (ii): Whether the reassessment proceedings initiated under section 147 of the Income-tax Act, 1961 were valid.

Analysis: The challenge to the notice and the manner of initiation was not open in this reference because the specific question had not been permitted to be raised before the Tribunal and the prior writ proceeding had already negatived the objection of initial lack of jurisdiction. The assessee could not introduce fresh factual objections at the reference stage. The proceedings were therefore not vitiated on the grounds urged.

Conclusion: The reassessment proceedings were held valid. This issue was decided against the assessee and in favour of the Revenue.

Final Conclusion: The reference was answered in favour of the Revenue on both questions, upholding the assessment of the business as an association of persons and the validity of the reassessment proceedings.

Ratio Decidendi: A business may be assessed as an association of persons where the material shows a common venture carried on with unitary control and profit-making purpose, and a finding on such factual inference will not be disturbed as perverse unless unsupported by evidence; further, a challenge to reassessment initiation cannot be raised for the first time in reference when it was not permitted or decided below.

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