Law:

Section:

Section 155 of the Income-tax Act, 1961 (Corresponding to section 35(6) of the Indian Income-tax Act, 1922), read with sections 6 and 10 of the Business Profits Tax Act, 1947 - Rectification of mistakes - Other amendments - Assessment year 1949-50 - While completing assessment on 27-1-1956, ITO found that there was deficiency which, by virtue of section 6 of 1947 Act, was deemed to have reduced taxable profits of previous year - However, order setting off deficiency was actually passed on 18-2-1960 - Thereafter ITO rectified income-tax assessment under section 35(6) of 1922 Act on 10-3-1960 and issued notice of demand - Whether period of four years to rectify assessment order provided under section 35(6) of 1922 Act was period commencing from 18-2-1960 and, therefore, action taken by ITO under section 35(6) of 1922 Act was perfectly within time - Held, yes FACTS The assessment order for the assessment year 1949-50, was made on 27-1-1956. It was found that there was a deficiency of Rs. 1,13,169, which by virtue of the provisions of section 6 of the Business Profits Tax Act was deemed to have reduced the taxable profits of the previous chargeable accounting period ending 31-3-1957. In this assessment order, therefore, it was stated that the deficiency would be set off against the taxable profits of the first chargeable accounting period ending 31-3-1947. The order setting off the deficiency, however, was actually passed by the officer on 18-2-1960, and since the deficiency was larger than the taxable profits of business of the first chargeable accounting period, the entire business profits tax was declared as refundable to the petitioner. The first respondent, the ITO, thereafter, in view of section 10 of the Business Profits Tax Act, proceeded to rectify the income-tax assessment for the assessment year 1949-50 under section 35(6) of the 1922 Act on 10-3-1960. The petitioner opposed this action on the part of the ITO contending that the four years' period provided under section 35(6) of the 1922 Act commenced from 27-1-1956, and, therefore, the action proposed to be taken by the ITO which was beyond the period of four years from the said date was barred by…

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