Law:

Section:

Section 155, read with section 154, of the Income-tax Act, 1961 - Rectification of mistakes - Other amendments - Assessment years 1958-59 to 1960-61 - Whether while acting under section 155, ITO could have change basis of taxation - Held, no - ITO while passing order, mentioned section 154 as section under which said order was passed taking higher share of profit as determined in case of firms in assessment of assessee partner instead of share taken earlier and treated such share of profit as unearned income, whereas same had been treated in original assessments as earned income - Whether from notice issued by ITO it was clear that he intended to pass order under section 155 and therefore, so long as he had jurisdiction to pass order under section 155, his order might properly be read as that made under section 155 - Held, yes - Whether mistake committed by ITO might be apparent from record, but such mistake could not be rectified under section 155, and hence, ITO was not justified in treating income in question as unearned - Held, yes FACTS The assessee was a partner in three firms. The ITO completed the assessment for the three years 1958-59, 1959-60, and 1960-61 accepting the assessee's share income from the above firms as returned by the assessee and noted in the assessment orders that the share incomes were being accepted subject to rectification later. In the assessment year 1958-59, the assessee's share in one firm, was a loss and was not taken into account in the original assessment. In 1959-60, neither income nor loss was taken into account. In the assessment year 1960-61, a loss of Rs. 4,941 from this firm was deducted. Against the share income from the other two firms, in the assessment for 1958-59, it was noted "tax earned". In the other two years, no mention was made as to the nature of the share income from the two firms. Subsequently, on completion of the assessments of the three firms, it was found that there were higher profits in the two firms, and that the assessee's share of profit required to be revised. The ITO issued notices under section 154/155 to the assessee for all the years stating that there was a mistake apparent from the record…

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