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 1946-47 - Whether sub-section (5) of section 35 of 1922 Act included by Indian Income-tax (Amendment) Act, 1953, having been given retrospective effect to a definite date, viz., 1-4-1952, it cannot have a greater retrospective effect so as to be operative from a date further back than that date - Held, yes - Whether once assessment or re-assessment of firm takes place after 1-4-1952 leading to reduction or enhancement in income of firm, under section 35(5) of 1922 Act by express provision rectification of mistake in assessment of partner can be made and it can be made within four years from final order passed in case of firm - Held, yes FACTS The appellant was a partner in a firm having a share in the business of the same. The firm was assessed to income-tax, consequently, share income of appellant also became taxable. On a re-assessment according to section 34 of the 1922 Act the ITO found the taxable income of the firm to be higher and the appellant share of the profits of the firm, that thus became available for inclusion in his taxable income also raised. The reassessment of the firm was made on 28-3-1956. After that on 23-8-1956, the ITO took steps to recover the additional amount of income-tax due from the appellant. The appellant then came in with a petition under article 226 to the High court questioning the legality of the additional demand from him. The ground taken was that the ITO, having re-assessed the taxable income of the firm, purported to move under sub-section (5) of section 35 of the 1922 Act, in rectifying mistake in his assessment, which assessment was completed some time in 1946. Sub-section (5) of section 35 of the 1922 Act was included in section 35 by the Income-tax (Amendment) Act, 1953, which has been given retrospective effect to be operative from 1-4-1952. It was the case of the appellant in the petition that his assessment having become final long before that date, there could be no rectification of any mistake in it under the provisions of the amending Act,…

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