Law: Income Tax Act, 1961

Section: 64,154

Law: Income Tax Act, 1922

Section: 16(3)(a)(ii),35

Section 154 of the Income-tax Act, 1961 (Corresponding to section 35 of Indian Income-tax Act, 1922) - Rectification of mistake - Apparent from record - Assessment years 1951-52 and 1952-53 - Whether exercise of power to rectify an error apparent from record is not discretionary and if conditions for its exercise are shown to exist, ITO cannot decline to exercise power - Held, yes Section 64 of the Income-tax Act, 1961 (Corresponding to section 16(3)(a)(ii) of Indian Income-tax Act, 1922) - Transfer of assets - For benefits of spouse, children etc. - Assessment years 1951-52 and 1952-53 - Pursuant to partition, assessee received share in properties of HUF - Subsequently, assessee formed another HUF of which he and his wife were members - Before expiry of relevant previous year, assessee's wife gave birth to a son - Whether since after partition, income of assessee was being assessed as of HUF and not in status of individual, section 16(3)(a)(ii) of 1922 Act did not apply and, therefore, income of minor son could not be included in income of assessee - Held, yes FACTS The assessee and his five sons were members of a HUF and the income received by the assessee was being assessed as income of a HUF. On 19-11-1949, the property of the joint family was partitioned between the assessee and his sons. Thereafter the assessee's wife gave birth to a son. The ITO accepted the partition but still assessed income of the assessee as income of a HUF. In appeal, the AAC treated a portion of income as earned between 1-10-1949, 18-11-1949, as income of the former HUF and directed that it be ' excluded from the assessment'. Pursuant to that order, the ITO made two orders of assessment - (1) assessing a portion of income as income of the HUF of the assessee and his five sons; and (2) assessee the remaining income also as income of HUF and liable to tax in the hands of the assessee by the application of section 16(3)(a)(ii ) of the 1922 Act. On the assessee's application under section 35 of the 1922 Act, the ITO accepted the plea that income assessed to tax in the hands of the assessee in the status of a HUF section 16(3)(a)( ii) of the 1922 Act, did not apply, but he declined to…

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