COMMSSIONER OF INCOME-TAX, BOMBAY,SOUTH POONA vs MURLIDHAR JHAWAR & PURNA GINNING ANDPRESSING FACTORY, DHAR

The Supreme Court held that under Section 23(3) of the Income-Tax Act, 1922, the Income-Tax Officer has the discretion to assess partners of an unregistered partnership either individually or collectively. However, once the Officer has exercised the option to assess the partners individually, he cannot subsequently reassess the same income in the hands of the unregistered firm. The Court upheld the Tribunal's decision that the Income-Tax Officer's initial assessment was an exercise of option, thus invalidating the subsequent collective assessment.