Law:

Section:

Section 155 of the Income-tax Act, 1961 (Corresponding to section 35(5) of the Indian Income-tax Act, 1922) - Rectification of mistakes - Other amendments - Assessment year 1951-52 - Whether it is fundamental to expect that all official acts are presumed to be done properly and legally - Held, yes - As a consequence of High Court's order, Tribunal directed that firm in which assessee was partner be recognised as a registered firm - ITO accordingly passed a rectification order under section 35(5) of 1922 Act, redetermining share income of assessee as a partner of a registered firm - Whether since it was order of High Court followed by directive of Tribunal in 1961, that was responsible for re-assessment and as reassessment was made when section 35(5) of 1922 Act was in statute book, it could not be contended that at time when rectification proceedings were undertaken under section 35(5) of 1922 Act, law as it stood on that date when it was rectified, could not be invoked - Held, yes FACTS For the assessment year 1951-52, the firm was originally assessed in the status of an unregistered firm and the share income of the assessee-partner was determined and was subjected to tax as well. The High Court in a tax revision case held that the firm was entitled to registration, and as a consequence thereof, the Tribunal directed that the firm be recognized as a registered firm. The ITO accordingly redetermined the share income of the assessee as a partner of a registered firm, by an order passed under section 35(5). On writ, the assessee petitioner contended that (1) as section 35(5) was inserted by the Income-tax (Amendment) Act, of 1953, and came into effect from 1-4-1952, the law which prevailed on that date ought to apply and that, in that sense, there being no corresponding provision in the earlier enactment such as section 35(5), the assessment was bad and without jurisdiction; and that the ITO did not pursue the directive of the Tribunal by passing a fresh assessment on the firm as a registered firm and that this was the first step to reassess a partner in case it was found that the earlier assessment was wrong in material particulars, particularly in the matter of…

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