Law:

Section:

Section 34, read with section 155 of the Income-tax Act, 1961 [Corresponding to section 10(2)(vib), read with section 35 of the Indian Income-tax Act, 1922] - Depreciation allowance and development rebate - Conditions for - Assessment year 1964-65 - Before commencement of 1961 Act, assessee-firm had been allowed development rebate in respect of certain machinery under section 10(2)(vib) of 1922 Act for assessment years 1960-61 and 1961-62 - During course of assessment proceedings for assessment year 1964-65, ITO having found that said machinery had been transferred by firm before expiry of statutory period prescribed 1922 Act, he, by an order dated 6-11-1965, withdrew rebate granted for assessment years 1960-61 and 1962-62 under section 155 of 1961 Act - On appeal, said order was upheld by AAC - Tribunal, by its order dated 5-3-1970, held that appeal to AAC against order of ITO was incompetent and, thus, confirmed order of ITO - Subsequently, Tribunal passed an order for rectification on 26-8-1970 setting aside its earlier order purportedly under section 234(2) of 1961 Act and directed that appeals of assessee be heard afresh - Whether, since return of income for assessment years 1960-61 and 1961-62 was filed before commencement of 1961 Act, proceedings for assessment of assessee in connection with said return might be taken and continued as if 1961 Act had not been passed - Held, yes - Whether, therefore, provisions of section 155 of 1961 Act including section 34(3)(b) did not apply and order passed by ITO dated 8-11-1965 might be deemed to be an order of rectification of mistake under section 35(1) of 1922 Act by fiction of section 35(11) - Held, yes - Whether further, assessee having no right to appeal against an order of rectification under 1922 Act, appeal before AAC was not competent - Held, yes - Whether, therefore, Tribunal was in error in holding that there was a mistake apparent from record in its order dated 5-3-1970 and, said order was to be quashed and that of 5-3-1970 was to be restored - Held, yes FACTS The assessee was a registered firm. While dealing with assessment proceedings of the assessee under 1961 Act, for the year 1964-65, the ITO found…

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