Law:

Section:

Section 23(1) of the Indian Income-tax Act, 1922 [corresponding to section 143 of the Income-tax Act, 1961] - Assessment of income from high denomination notes - Assessee had encashed high denomination notes of certain value from a bank on 19-1-1946 and as assessee failed to explain nature and source of said amount ITO assessed same as assessee's income for assessment year 1947-48 - During pendency of appeal before AAC, assessee entered into a settlement in 1960 under section 34(1B) of the 1922 Act whereby it was accepted that certain income including said amount had escaped assessment and same was to be assessed in assessment year 1947-48 - Whether assessee could contend later that as the high denomination notes were encashed during financial year relevant to assessment year 1946-47 impugned amount should be assessed in assessment year 1946-47 and not in assessment year 1947-48 - Held, on facts, no Section 35(6) of the Indian Income-tax Act, 1922 [corresponding to section 155(3) of the Income-tax Act, 1961] - Rectification - Other amendments - Under a settlement arrived at between assessee and department certain am 3a it received by assessee on account of encashment of high denomination notes was treated as as33ssee's business income and liability to excess profit tax and busin33S profit tax was allowed as deduction - On appeal, Tribunal, however, held that said income was to be treated as assessee's income from other sources and not as his business income and, therefore, no excess profits tax liability or business profits tax liability could be fastened on assessee - In view of this order of Tribunal, ITO rectified original assessment order acting under section 155(3) of the 1931 Act, by which deduction in respect of business profits tax and excess profits tax payable was withdrawn - Whether since original assessment was made under the 1922 Act rectification to this could only be made under section 35(6) of the 1922 Act - Held, yes - Whether ITO's rectification order under section 155(3) of the 1961 Act could be deemed to have been made under section 35(6) of the 1922 Act and was, therefore, valid - Held, yes - Whether ITO was right in rectifying his original…

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