Taxation must fall on the legally liable person; wrong assessment of members does not prevent assessment of the association.

Under the Income-tax Act, 1961, there is no Assessing Officer discretion to tax either an association of persons or its members individually for the same income. The Act requires assessment of the person who is legally chargeable to tax, and its scheme differs from the 1922 Act, which expressly allowed such an election in certain cases. If income belonging in law to the association is assessed in the hands of members, that mistake does not bar lawful assessment of the association. The retention of discretionary treatment for unregistered firms in section 183, without a similar provision for associations of persons, confirms the absence of any such option.

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Issues: Whether, under the Income-tax Act, 1961, the Assessing Officer has an option to tax either an association of persons or its members individually in respect of the same income, and whether assessment of the members in their individual capacity bars assessment of the association of persons for that income.

Analysis: The charging scheme of the 1961 Act differs materially from the 1922 Act. Under the 1922 Act, the charging provision expressly contemplated assessment either on the association of persons or on the members individually, which could support an administrative choice based on revenue interests. The 1961 Act, by contrast, charges tax on the total income of every person and defines "person" to include an association of persons, but it does not confer any corresponding option to assess either the association or its members at the Assessing Officer's discretion. The scheme requires taxation of the person who is in law liable on that income. If income belonging in law to the association is wrongly assessed in the hands of members, that does not immunise the association from lawful assessment. Parliament's express retention of discretion in section 183 for unregistered firms, while omitting any comparable option for associations of persons, reinforces that no such option exists under the 1961 Act.

Conclusion: There is no option under the Income-tax Act, 1961 to choose between taxing an association of persons and taxing its members individually for the same income. The Assessing Officer must tax the right person, and prior taxation of the wrong person does not bar assessment of the right person.

Ratio Decidendi: Under the Income-tax Act, 1961, liability must be fastened on the person legally chargeable to tax, and assessment of another person does not create an estoppel against taxing the person actually liable.

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