JUDGMENT

BRIJLAL GUPTA J. - This is a reference u/s 66(1) of the Income Tax Act. The question which has been referred for the opinion of the court is :

"Whether it was legal to determine the applicants share income from the firm of Paras Nath Oil Mills in the assessment proceedings relating to the applicant and to add it to the applicants income without raising a separate assessment on the firm of Paras Nath Oil Mills ?"

The assessee is a Hindu Undivided family. It was assessed for the assessment year 1953-54 but without the inclusion in that assessment of it share income from firm known as Paras Nath Oil Mills. In the course of the assessment of the subsequent year the Income Tax Officer came into possession of information that the assessee had started business in partnership under the name and style of Paras Nath Oil Mills in the accounting year relating to the assessment year 1953-54 and had realized a portion of its income from its share of the income of the partnership business. Accordingly, proceedings were taken against the assessee u/s 34 of the Income Tax Act and the share income of the assessee from the firm was included in its assessment.

The assessee went up in appeal and on the question of inclusion of its share income from the firm the Appellate Assistant Commissioner affirmed the order of the Income Tax Officer. The assessee then went up in further appeal to the Income Tax Appellate Tribunal, and before the Tribunal and by leave of the Tribunal, a new ground was urged by it. The ground was that, without an assessment having first been made on the firm, the assessees share on income from the firm could not be included in its assessment. No authority was cited by counsel is support of the contention and the Tribunal took the view that, as there was no bar to the adoption of the course which had been adopted by the Income Tax authorities for the inclusion of the income from the firm without an assessment against the firm having been made, the inclusion of the income in the assessment of the assessee was not bad. In due course on application by the assessee for reference of the question to this court the Tribunal has stated the case on the question.

Learned counsel for the assessee conceded that there is no express provision in the Act which prohibits assessment of the share of a partner in the income of a firm before an assessment is made against the firm itself. Learned counsel also brought to our notice a decision of the Bombay High Court in J.C. Thakkar v. Commissioner of Income Tax, which, as conceded by learned counsel, was against the contention which he was making in this reference. It was laid down in this case that :

"The assessment of a partner of an unregistered firm on his share income of the profits in the firm is not illegal on the ground that the unregistered firm of which he is a partner has not been first assessed to tax."

It has been found in this case that the income of the first was less than the minimum assessable income. Accordingly, no assessment could be made against it. It has also been found that the firm was an unregistered firm. In the circumstances there is nothing in this case to distinguish it from the case with which the Bombay High Court had to deal.

Learned counsel has invited our attention to several provisions of the Act, and on the basis of those provisions of the he has urged that it would not have been the intention of the Legislature that the share of a partner in the income of the firm could be included and assessed in his hands prior to the assessment of the firm itself. He referred to the provision in section 3 but it is not understood what support he could derive from it. That section is the charging section under the Act and refers to a firm and the partners of the firms alternative chargeable entities. No priority or preference in favour of the firm or partner is mentioned in that section. There is nothing in it to suggest that unless the firm has been taxed first a partner of