Firm income ascertained under Section 23(5) bars treating higher partnership profits when assessing an individual partner.

Where a registered firm's total income has been ascertained under the statutory procedure for determining firm income and allocating partners' shares, that determination precludes the tax department from treating the firm's total income as greater when assessing an individual partner for the same year; consequently additional partnership profits not included in the firm's ascertained total cannot be added to a partner's assessment for that year. The practical effect is that partners' taxable shares must follow the firm assessment and the department may not relitigate the firm's total in parallel partner assessments.

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Issues: Whether, after the total income of a registered firm has been ascertained under Section 23(5) of the Income-tax Act, the Income-tax Department can, in the assessment of an individual partner, include additional partnership profits that did not form part of the total income so ascertained.

Analysis: Section 23(5) provides the statutory procedure for ascertaining the total income of a registered firm and for determining the taxable share of each partner. Once the firm has been assessed and its total income determined under that provision, the assessed total constitutes the basis for allocating partners' shares for that assessment year. Allowing the Department, when assessing an individual partner in the same assessment cycle, to treat the firm's total income as greater than the amount already ascertained would amount to varying the firm's determined total in the same assessment proceedings. Precedents discussing partners' inability to claim exemptions under Section 4 after firm assessment do not address the distinct question whether the Department may reassess a partner on additional partnership profits where the firm has already been assessed under Section 23(5). Authorities decided under prior statutory schemes where liability upon the firm existed are not dispositive where the present Act places primary obligation on partners and prescribes the assessment machinery in Section 23(5).

Conclusion: Once the total income of a registered firm has been ascertained under Section 23(5) of the Income-tax Act and partners' shares have been determined in that assessment, the Income-tax Department cannot, in the assessment of an individual partner for the same year, include additional partnership profits which did not form part of the firm's total income as so ascertained. The Department's attempt to assess the appellant on such additional partnership income is not permissible.

Final Conclusion: The appeal challenging the partner's assessment on the additional partnership profits is resolved in favour of the assessee; the Department may not treat the firm's total income as different from the amount determined under Section 23(5) when assessing the individual partner for the same accounting year.

Ratio Decidendi: Where a registered firm's total income has been finally ascertained under Section 23(5) of the Income-tax Act for an assessment year, that determination precludes treating the firm's total income as greater when assessing an individual partner for the same year.

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