Law: Income Tax Act, 1922

Section: 35

Section 154, read with section 147 of the Income-tax Act, 1961 [Corresponding to section 35, read with section 34(1) of the Indian Income-tax Act, 1922] - Rectification of mistake - Apparent from record - Assessment year 1943-44 - Whether neither section 34(1), nor section 35(1) laid down that if one of them would apply other would not apply - Held, yes - Whether if there is a mistake apparent from record of assessment, it can be rectified under section 35(1) even though some income has escaped from assessment as a result of mistake which can be rectified by ITO by proceeding under section 34(1) instead - Held, yes - Whether rectification of one apparent mistake under section 35(1) of 1922 Act, does not prevent subsequent rectification of another apparent mistake under same provision - Held, yes - Assessee a partner in two firms, showing income from two firms 'G' and 'B' separately - Assessing Officer assessing firm 'G' held both were same and aggregated their income - In case of assessee, Assessing Officer took income of firm 'G' only - On appeal, in case of firm 'G', it was held two firms were separate and income of firm 'G' was reduced - On being informed, Assessing Officer in case of assessee rectified assessee's income and reduced his income from firm 'G' - Subsequently, firm 'B' was assessed and Assessing Officer having jurisdiction over assessee again initiated rectification proceedings and make addition to assessee's income and raised tax demand - On failure to pay tax demand penalty was imposed - Whether second rectification was not unjust and thus, penalty imposed was to be upheld - Held, yes FACTS The assessee was a partner in two firms 'G' and 'B'. The assessee submitted a return showing separately his incomes from the partnership in the two firms. According to the return the two firms existed distinctly from each other. The ITO assessed the firm "G" on the incomes from the two firms holding that the so-called firm "B" was not a distinct firm and was a mere branch of firm "G". He, therefore, added up the incomes from the two firms and assessed the firm "G" on the aggregate. He then informed the ITO, who had to assess the assessee, of his share in…

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