High Court allows individual assessment of partner's income from firm, emphasizing no double taxation.

The High Court ruled in favor of the Income-tax Department, allowing the Income-tax Officer to assess an individual partner's income from a firm without prior assessment of the firm itself. The court held that partners of both registered and unregistered firms could be assessed individually or collectively, emphasizing that income cannot be assessed twice, once in the hands of partners and again in the hands of the firm. The court upheld its previous decisions and directed the assessee to pay the Commissioner of Income-tax costs of the reference in each case.

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Issues:
1. Assessment of a partner's share income from a firm without prior assessment of the firm itself.
2. Legal validity of assessing partners of an unregistered firm individually or collectively.

Analysis:
Issue 1:
The High Court considered two connected references under section 66 of the Indian Income-tax Act, 1922, where the Income-tax Officer assessed two partners of a registered firm on their shares of income without prior assessment of the firm itself. The court addressed the question of whether it was legal to assess the partners' share income from the firm before raising a separate assessment on the firm. The court referred to various precedents, including J. C. Thakkar v. Commissioner of Income-tax, Hazari Ram Mohan Ram v. Commissioner of Income-tax, and Commissioner of Income-tax v. Murlidhar Jhawar and Purna Ginning & Pressing Factory, to establish that partners could be assessed individually without a separate assessment on the firm. The court held that an Income-tax Officer could assess an individual's income from a firm without first assessing the firm itself.

Issue 2:
The court also addressed the legal validity of assessing partners of an unregistered firm individually or collectively. Referring to Commissioner of Income-tax v. Murlidhar Jhawar and Purna Ginning & Pressing Factory, the court highlighted that partners of an unregistered firm could be assessed individually or collectively as a firm. However, the Income-tax Officer could not assess the same income twice, once in the hands of the partners and again in the hands of the unregistered firm. The court emphasized that once the income of an association was charged to income-tax in the hands of the members individually, there could be no fresh assessment of the income in the hands of the association. The court upheld the authority of its previous decision in Hazari Ram Mohan Ram v. Commissioner of Income-tax, allowing an Income-tax Officer to assess an individual's income from a firm without prior assessment of the firm itself.

In conclusion, the High Court answered the question referred to it in the affirmative, ruling in favor of the Income-tax Department. The court directed the assessee to pay the Commissioner of Income-tax costs of the reference in each case.

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