Additional grounds and firm assessment under income tax law can stand despite earlier partner assessments.

Permission to raise an additional ground before the Tribunal is discretionary, and may be refused where the point depends on fresh factual inquiry or material not already on record; here, the refusal was justified because the assessee sought to rely on departmental records not before the Tribunal. Under the Indian Income-tax Act, 1922, the completed assessment of partners on their shares of profit does not bar a later assessment of the firm, because the statutory scheme, including the rectification mechanism in section 35(5), contemplates adjustment of partner assessments after the firm's assessment. The firm's assessment was therefore valid in law, and the challenge failed.

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Issues: (i) Whether the Tribunal was right in declining to permit the assessee to raise the additional ground and adduce additional evidence. (ii) Whether the assessment made on the firm was valid when the partners had already been assessed on their shares of profit.

Issue (i): Whether the Tribunal was right in declining to permit the assessee to raise the additional ground and adduce additional evidence.

Analysis: Permission to raise an additional ground is ordinarily a matter of discretion. A pure question of law may be admitted if it does not require investigation of new facts, but the Tribunal may refuse where fresh factual inquiry is needed. Here, the assessee sought to rely on prior assessment orders to show that the partners had already been assessed before the firm's assessment. The Tribunal found that the necessary material was not on record and that the point could not be decided without looking into the department's records.

Conclusion: The Tribunal was justified in refusing to admit the additional ground, and the issue is answered against the assessee and in favour of the Revenue.

Issue (ii): Whether the assessment made on the firm was valid when the partners had already been assessed on their shares of profit.

Analysis: The scheme of the Indian Income-tax Act, 1922, especially section 23(5) and section 35(5), shows that completed assessments of partners do not prevent a subsequent assessment of the firm. Section 35(5) specifically contemplates rectification where the firm's assessment affects a partner's completed assessment, which would be unnecessary if the firm's assessment were barred after partner assessments. The provisions relating to assessment of firms and partners therefore permit the firm's assessment even after the partners have been assessed.

Conclusion: The assessment on the firm was valid in law, and this issue is answered against the assessee and in favour of the Revenue.

Final Conclusion: The reference was decided wholly in favour of the Revenue, and the assessee's challenge to the firm's assessment failed.

Ratio Decidendi: Under the Indian Income-tax Act, 1922, the completed assessment of partners does not bar a subsequent assessment of the firm, because the statute itself provides for adjustment or rectification of the partners' assessments after the firm's assessment is made.

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