Late Smt. K. Bhoomiamma (By Legal ... vs Commissioner Of Income-Tax on 26 June, 1991
In another decision rendered in CIT v. S. R. Kandan Chettiar and Sons [1990] 186 ITR 339, the Madras High Court again held that the option that was found in section 3 of the 1992 Act continued to exist even in section 4 of the 1961 Act. The assessment made on the firm was set aside by the court with a direction to make further assessment according to law, since the constitution of the firm was found to be invalid; after this order was altered by the Appellate Tribunal, the Income-tax Officer proceeded to assess the firm treating it as an unregistered firm. The Appellate Assistant Commissioner held that the status of the assessee was that of an association of persons. Since the members of the association of persons were already assessed, it was not open to assess the income again in the hands of the association of persons. This view was altered by the Appellate Tribunal which held that the option having once been exercised to assess the income in the hands of the partners, the firm cannot be assessed. Reference was sought by the Revenue which mainly contended that there was no material at all to hold that the Income-tax Officer had exercised his option and, that therefore, he could not assess the firm again. The question referred to the court is found at page 340 as under :