Law: Income Tax Act, 1961

Section: 154

Law: Income Tax Act, 1922

Section: 35

Section 154 of the Income-tax Act, 1961 [Corresponding to section 35 of the Indian Income-Tax Act, 1922] - Rectification of mistakes - Apparent from records - Whether section 35(5) of 1922 Act did not apply to original assessment orders passed prior to 1-4-1952 - Held, yes - Partners of a firm had agreed to inclusion of their share incomes as declared in returns to their total income and had no objection to revision of their assessments by adoption of correct share income after firm's assessment was completed - Whether, in aforesaid circumstances, order passed under section 35(1) of 1922 Act rectifying mistake by taking their share incomes as determined in case of firm, could not be said to be without jurisdiction - Held, yes FACTS The petitioners were partners in a firm. They submitted their individual returns on 31-8-1951, declaring their income including a provisional sum representing their share of income from the firm. As the firm's assessment was not completed by that time, each of the petitioners expressed in writing that they had no objection to adopting correct share income after the firm's assessment was completed and revising the order under section 35. The ITO without waiting for the completion of the assessment of the firm, made their individual assessments. When the firm's assessment was completed it was found that the share income of the partners in the return submitted by them was not correct. He therefore, revised the assessments under section 35 and sent the impugned orders to the petitioners in the year 1955 before the completion of the four years period from the date of the original assessment. On writ petition challenging the legality of the orders : HELD There was nothing in section 35(5) which would render the amendment more retrospective than its language and it could not therefore cover the assessments made prior to 1-4-1952. The original assessments have been made prior to that date, the instant case was not covered by the provisions of section 35(5). The original order under section 23(3) was not a provisional assessment, though it was made subject to revision, if need be. When once a final assessment is made it cannot be reopened…

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