Law:

Section:

Section 155(1) of the income-tax act, 1961-Rectification of mistake-Partners' assessment-Whether an order passed under section 155(1), enhancing a partner's assessment, without affording him an opportunity of being heard is invalid-held, yes Facts The assessee's share income from two firms taken provisionally in his regular assessments was revised upwards on subsequent intimation of the assessee's correct share income from those firms, under section 155 read with section 154. The assessee's contention that no hearing was given before the rectification was made under section 155 was rejected by the AAC who held that there was no provision for such hearing. The Tribunal, however, upheld the assessee's contention and reversed the AAC's order. On reference : Held Section 155(1), which provides for amending the order of assessment of a partner with a view to inclusion of the share of the partner in the income of the firm in the assessment of the partner, lays down that the provisions of section 154 shall, so far as may be, apply to these proceedings. Subsection (3) of section 154 provides that the amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made unless the authority concerned has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard. In the instant case, no such notice was given. Therefore, the Tribunal was right in holding that the order passed by the ITO under section 155(1)/154(3) without giving the assessee an opportunity of being heard, was vitiated. Order SOHANI, J.- By this reference under section 256(1) of the Income-tax Act, 1961 ('the Act'), the Tribunal, Indore Bench, has referred the following question of law to this Court for its opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the Income-tax Officer's order under section 155(1) for the assessment year 1968-69 by holding that the said order passed by the ITO was invalid ?" 2. The material facts giving rise to this reference briefly are as follows: The assessee is an…

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