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Issues: Whether, after the partners of a registered firm had first been assessed on their share income, the Income-tax Officer could still validly assess the firm.
Analysis: Under section 3 read with section 23(5) of the Income-tax Act, 1922 as amended in 1956, a registered firm and its partners are distinct assessable entities. In the case of a registered firm, the statute requires assessment of the firm itself as well as assessment of each partner on his share of the firm's income, unlike an unregistered firm where the department may exercise a choice between the firm and the partners. The earlier authorities dealing with unregistered firms or associations of persons did not govern the statutory scheme applicable to registered firms. Section 35(5) further shows that the legislature contemplated that partners might be assessed before the firm's assessment and provided a mechanism to rectify their assessments on the basis of the firm's final assessment.
Conclusion: The prior assessment of the partners did not bar the assessment of the registered firm, and the firm's assessment was valid.
Ratio Decidendi: After the 1956 amendment to section 23(5), a registered firm and its partners are separately assessable, so assessment of the partners first does not preclude subsequent assessment of the firm, and section 35(5) permits corresponding rectification of the partners' assessments.
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