1966 (1) TMI 18

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.... parties, and thereafter he called upon Murlidhar to submit a return of the " income of the joint venture " on the footing that the parties thereto constituted an unregistered firm. Murlidhar complied with the requisition and submitted in November, 1957, a return, but later applied to withdraw it by application dated December 18, 1957. The Income-tax Officer rejected the application for withdrawal of return and completed the assessment of the three parties to the joint venture under section 23(3) of the Income-tax Act, 1922, in the status of an unregistered firm and computed the income of the joint venture at Rs. 80,925. In appeal to the Appellate Assistant Commissioner the order passed by the Income-tax Officer was confirmed. In second app....

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.... 228 : " The section (section 3) expressly treats an association of persons and the individual members of an association as two distinct and different assessable entities. On the terms of the section the tax can be levied on either of the said two entities according to the provisions of the Act. " The same principle would apply to the case of assessment of partners individually of an unregistered firm. The partners may be assessed individually or they may be assessed collectively in the status of an unregistered firm : the Income-tax Officer cannot however seek to assess the one income twice---once in the hands of the partners and again in the hands of the unregistered firm. Mr. Viswanatha Sastri for the department contends that th....

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....l and Govindbai who were partners of Messrs. Purna Ginning and Pressing Factory and by Murlidhar. The Income-tax Officer had assessed the income of the three parties separately and added to the individual income of each party his or her share in the profits of the joint venture. The Income-tax Officer had information that the three parties, two of whom were members of a registered trading firm, had effected transactions in groundnut, cotton and cotton-seed. Apparently returns in respect of these trading transactions were separately made and a third share was included in the individual assessment of each of the three parties. Apart from an association of individuals or a firm, the Income-tax Act does not recognize a collection of individuals....

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....ce and without determining the shares of the three parties to the joint venture. In determining the shares of the three parties, he had also to determine the contractual relation which gave rise to the right to a share in the profit. Again the order of the Income-tax Officer clearly indicates that he was cognizant of the fact that the income of the joint venture was taxable collectively, but he thought that he could in law in the first instance make an " assessment provisionally " of the three parties separately and then rectify the assessments later. In so holding the Income-tax Officer may have committed an error of law, but he does not appear to have laboured under an ignorance of facts. A survey of the contentions raised before the depa....