Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Income Tax Act 1961 |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | Income Tax Act, 1961-Section 4(1)-Levy of income tax on total income of every person-Charge of income- Income Tax Officer must tax right person and right person alone-No option available-Tax has to be levied on that person, whether an individual, HUF, Company, Firm, Association of persons/BOP etc.-Difference between 1922 Act and 1961 Act. The respondent and another person K purchased certain land under a sale deed dated 20.10.1962 for a consideration of Rs. 75.000. Even prior to the execution of the sale deed, the lands had been notified for acquisition under the Land Acquisition Act. The compensation amount was received by the respondent and K in equal shares. On reference, the compensation as enhanced was also shared between the respondent and K in equal proportion.In the assessment proceedings relating to Assessment year 1965-66, the Income Tax Officer include a sum of Rs. 35,397, an amount determined after deducting the amount contributed by the respondent towards the purchase of the lauds, treating it as the capital gain, in the income of the respondent. Again in the assessment relating to Assessment Year 1968-69, the enhanced compensation falling to the share of respondent was brought to tax as capital gain. The assessee K was also taxed in the same manner for both these assessment years.In February 1972 the ITO issued a notice to both the respondent and K u/s 148 of the Income Tax Act stating that he had reason to believe that income chargeable to tax for the Assessment Year 1964-65 had escaped assessment. He called upon them to file a return. The respondent and K filed a 'Nil' return. The ITO proposed ·to tax them as an Association of persons and bring the entire profit made by them as capital gain in the hands of such Association of Persons. The respondent and K challenged the notice by filing a writ petition alleging that the ITO having assessed the share of each of them in their respective individual hands, had no jurisdiction to assess the same income as the income of and in the hands of the Association of Persons as having exercised the discretion vested in him to assess them individually with respect to their shares, it was not open to him to assess them as an Association of Persons with respect to the very same income. The High Court allowing the petition held that the ITO has an option to assess either the Association of persons as a unit or the members there of individually and having exercised the option to assess the members of the Association of Persons individuals, he cannot seek to tax the Association of Persons with respect to the very same income.This appeal had been filed against the judgment of the High Court allowing the writ petition and issuing a writ of prohibition restraining the appellant from taking any action pursuant to the notice. The appellant urged that the High Court was in error in holding that under the 1961 Act, like the 1922 Act option is available to the Income Tax Officer to tax either Association of Persons or its members individually. The right person has to be taxed and merely because a wrong person is taxed, it does not operate as a bar to taxing the right person and if in law the income bad to be taxed in the hands of Association of Persons, it had to be taxed as such and the mere fact that the said income was taxed in the hands of individual members of Association of Persons does not bar the Income Tax Officer from taking the Association of Persons.The appellant-assessee contended that there was no difference between the position obtaining under the 1922 Act and the present Act.Allowing the appeal |
Judge | Hon'ble Mr. Justice B.P. Jeevan Reddy |
Neutral Citation | 1995 INSC 876 |
Petitioner | Income Tax Officer |
Respondent | Ch. Atchaiah |
SCR | [1995] Supp. (6) S.C.R. 543 |
Judgement Date | 1995-12-11 |
Case Number | 2513 |
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