JUDGMENT

V. Bhargava, J. - The ten petitioners, who have filed this petition under Article 226 of the Constitution, were admittedly members of an association of persons known as the District Khand Kothiwal Association, Kasganj, which was formed under a scheme formulated by the Collector of Etah for distribution of khandsari sugar at controlled rates. The Association functioned between the 8th of January, 1947, and 6-1-1948. Certain profits were earned by the Association during this period.

The profits thus earned were shown as income in the individual account books of all the members of the Association. Out of the 30 members, 23 were assessed to Income Tax. Those members, whose income was taxable, were assessed to Income Tax even in respect of their share of profits earned by the Association and the tax levied was paid by them.

Subsequently, on 1-3-1952, the Income Tax Officer assessed the income of the Association for the two assessment years 1947-48 and 1948-49 at Rs. 70,000/- and Rs. 50,000/- respectively in the hands of the Association. The President of the Association filed an appeal which was ultimately allowed by the Income Tax Appellate Tribunal, Delhi, and the assessments were set aside.

On 23-4-1955, the Income Tax Officer made fresh assessments of the income in the hands of the Association. It is alleged that no notice of those proceedings was given to the ten petitioners, nor were the assessment orders dated 23-4-1955, communicated to them. It seems that the communication was sent to the President of the Association on whom was also served the notice during the time that the proceedings were being taken. The members of the Association got knowledge of the order of assessment dated 23-4-1955, when notices of demand dated 7-11-1955, were served on them. Thereupon they presented writ petition challenging these two assessment orders.

2. Two of the grounds, on which those two orders were challenged and which were strenuously argued before us by learned counsel for the petitioners, did not appeal to us. The first ground was that, in fact, there was no association of persons within the meaning of that expression as used in Section 3 of the Indian Income Tax Act because the Association was not a voluntary association formed by the petitioners and other members but was an association in which they all joined under compulsion.

This argument could not be accepted by us because it did not appear from the facts that there was any compulsion on any member to join in that association. All that the Government and the Collector of Etah did was to formulate a scheme under which the business of wholesale Khandsari sugar could only be carried out by an association of persons and not by individuals or by individual firms.

Thereafter it was the option of the petitioners to join or not to join the association. There is no assertion at all that they joined the Association under any compulsion. The affidavit filed on behalf of the petitioners only gives an indication that they joined voluntarily, because otherwise they would have had to give up their business of selling khandsari sugar as wholesale dealers.

The Association was thus not an association constituted under any law or under any directions of the State authorities under which these petitioners compulsorily became members of the Association without their consent. The facts further show that not only did the petitioners join the Association but they also contributed working capital for the Association.

Even the amount of capital furnished by each member was not the same which itself is an indication that the Association was formed by an agreement of the members forming it under which alone different amounts of capital could be provided by the members joining it. Had these members joined under any compulsion under the orders of the Collector or Government, it cannot be expected that those orders would have permitted contribution of different amounts as capital by different members. Learned c