Law:

Section:

Section 155, read with section 147, of the Income-tax Act, 1961 - Rectification of mistakes - Other amendments - Assessment year 1960-61 - Assessee was partner in a firm - On 30-3-1960, he retired from partnership - In his individual assessment, assessee was assessed in respect of share income of firm - Consequent upon raid, firm was reassessed at higher income - Whether subsequent compromise between Department and remaining partners pursuant to raid would be binding on assessee - Held, yes - Whether ITO was justified in rectifying assessment of retired partner to include higher share in profit of firm as reassessed - Held, yes Section 246, read with section 155, of the Income-tax Act, 1961 - Commissioner (Appeals) - Appealable orders - Assessment year 1960-61 - Firm in which assessee was partner was reassessed at higher income - Assessment of assessee was thereafter, rectified under section 155 to include his correct enhanced share in firm - Whether assessee could deny, in appeal, liability to additional tax on enhanced share income following reassessment on firm - Held, yes FACTS The assessee who was partner in a firm retired from the partnership with effect from 30-3-1960. In his individual assessment, the assessee was assessed on his share income from the firm. Subsequently, a search was conducted in the premises of the firm. Consequently, the assessment of the firm was reopened and the reassessment was made at higher income. The ITO thereafter rectified the individual assessment of the assessee to include correct enhanced share in the firm. The assessee objected to the revision of his assessment on the grounds that he was not liable for the reassessment of his individual share income for the assessment year 1960-61 since, it was made subsequent to his retirement and that the remaining partners of the firm who participated in the reassessment had compromised with the Income-tax Department, and such a compromise was not binding on him as an erstwhile partner as he was not a party to the compromise. These objections were orverruled by the ITO, who proceeded to complete the individual assessment of the assessee in terms of section 155(1). On appeal, the…

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