Once the option to make an assessment against an individual has been exercised, the department cannot proceed to assess the association formed by him for the same income for the same years.

( 1 ) THIS judgment will dispose of C. W. 387-D/63 and C. W. 388-D/63, former has been filed by Ravinder Narain and latter by Bishan Narain and Sham Narain. These raise common questions of law and fact. The material facts are taken from second writ petition.

( 2 ) IT appears that there was an agricultural land situated in Mauza Malikpur Chaoni on the Grand Trunk Road, Delhi. Nine persons had separate defined shares in them. On 22nd July, 1949, they entered into an agreement with Delhi Land and Finance Limited for the purpose of development and parcelling out of the land in plots and sale as a residential colony. Delhi Land and Finance Limited were appointed as their sole selling agents and a power of attorney was given to them. One of the terms of the agreement was that the company would get 50 per cent of the net realisations while the other 50 per cent would be given to the respective nine owners of the land in accordance with their shares in the land. It may be noticed that all the aforesaid nine. members do not belong to the same family.

( 3 ) DURING the assessment year 1953-54, Shri Suraj Narain, father of the petitioners in the second writ petition, filed a return of his total income in which he appended a note to the effect that he owned some lands and garden in the area in dispute inherited as, ancestral property which were not taxable and some of those lands had been sold during the current year. A certificate had been filed from Delhi Land and Finance Limited (hereinafter referred to as the Finance Company) showing that a sum of Rs. 28,82811-9 had been received by Shri Suraj Narain during that year. The Income-Tax Officer concerned by his order dated 26th August, 1953 held that, during the accounting year, the assessee had sold some of his ancestral agricultural land for, which he had received the amount mentioned as part payment and it was stated that the sale had been entrusted to the Finance Company which had paid the assessee the said amount. He noticed the submission of the assessee that he had merely converted his possession into cash which did not amount to business activity. The Income-Tax Officer, under the circumstances, accepted the explanation and held that the said income was not a revenue receipt, but was of the nature of non-business or for that matter a capital gain. The finding of the Income-Tax Officer is contained only in the case of the assessment of Shri Suraj Narain, who was the predecessor of the petitioners in the second petition. It is obvious that at that time the Income Tax Officer did not propose to assess any association of persons constituted by the nine or ten persons mentioned above. The parties received further incomes on account of sale of lands from the Finance Company in subsequent years. On 26th March, 1963, the Income-Tax Officer issued two sets of notices for each of the four assessment years, namely 1954-55 and 1958-59, 1959-60 and 1960-61. proposing to assess the escaped income. The first set of notices was issued to the nine owners of the land or their legal representatives as land-owners besides the Finance Company. The second set of notices was issued to them with he addition of the name of the Finance Company. These are the notices which have been challenged in the present writ petitions.

( 4 ) THE writ petitions were filed in the High Court on or about 23rd May, 1963 and they were dismissed in limine by order of the High Court dated 24th May, 1963. Aggrieved by this order, the petitioners filed appeals in the Supreme Court which were allowed and petitions were remanded for decision according to law. (In para 5, pedigreetable of petitioners is given ).

( 5 ) NINE persons have been sought to be assessed on business arising out of sale of land and the income received therefrom during the four assessment years mentioned above. The petitioners have challenged the said notices in the two writ petitions and have contended that there was no business activity but only c