Double taxation barred where partnership income was already assessed in partners' hands before taxing the unregistered firm.

An assessment of an association of persons treated as an unregistered firm was invalid where the same partnership income had already been assessed in the hands of the individual partners. The court held that a firm and its partners are distinct assessable entities, but the revenue cannot tax the same income twice. Because the assessing officer had consciously exercised the option to assess the partners individually on the firm's income, and those assessments were final rather than provisional, it was not open to reassess that income in the hands of the unregistered firm. The assessment of the firm was therefore illegal and the issue was decided in favour of the assessee.

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Issues: Whether the assessment of the association of persons treated as an unregistered firm was valid when the share income of the same business had already been assessed in the hands of the individual partners.

Analysis: A firm and its partners are distinct assessable entities, and the revenue may assess either the partners individually or the firm as an unregistered firm, but not the same income twice. The assessments made on the partners were held to be regular and final assessments under the assessment provisions then applicable, not provisional assessments. Since the assessing officer had already exercised the option to assess the partners individually with full knowledge of the firm's income, it was not open to him thereafter to assess the same income again in the hands of the firm as an unregistered firm. The cited Supreme Court principle on prior assessment of partners also supported the bar against double taxation of the same income.

Conclusion: The assessment of the unregistered firm was invalid and illegal; the question was answered in the negative, in favour of the assessee.

Ratio Decidendi: Once the revenue has consciously assessed the partners individually in respect of partnership income by exercising its option, it cannot thereafter assess the same income again in the hands of the unregistered firm.

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