Commissioner of Income Tax vs Prakash Wine Agencies

M. Katju, J.—This is an income tax reference u/s 256(1) of the income tax Act, 1961 (''the Act'') in which the following question has been referred to this Court:

Whether in law and on facts of the case, the Tribunal was right in holding that the assessee-firm is entitled to the benefits of renewal of registration?

We have heard Shri Shekhar Srivastava, the learned counsel for the department and Shri Vikram Gulati for the assessee. The assessment year is 1981-82. The assessee had been granted registration from 1978-79 up to 1980-81 but for the assessment year 1981-82 the IAC refused to renew the registration holding that the firm was not genuine. The order of the IAC was confirmed by the Commissioner (Appeals) but in second appeal the Tribunal held in favour of the assessee. The department then filed an application u/s 256(1) which was allowed and the abovementioned question has been referred to this Court.

The facts of this case are that the partners of the assessee-firm had already been assessed for the relevant assessment year on the share of the profit of the firm as stated in para 4 of the Tribunal''s appellate order. The contention of the assessee is that once the partners had been separately assessed in respect of their shares of the income of the firm the IAC was not justified in treating the firm as an unregistered firm. In support of this contention, the learned counsel for the assessee has relied on the decision of this Court in Setha Ram Dhanvir Singh Vs. Commissioner of Income Tax, . In this decision it has been held that the ITO cannot assess the same income twice, once in the hands of partners and then again treating the assessee-firm as unregistered. Following the aforesaid decision, we answer the question referred to us in the affirmative, in favour of the assessee and against the department. Assessee shall be entitled to a cost of Rs. 200.