TMI Blog1970 (6) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... discrepancy between the stock of cotton shown in the records of the petitioner and in the records of the State Bank of India, with whom the petitioner had hypothecated its said stock of cotton. This discrepancy was sought to be explained by the petitioner by contending that it had given an incorrect figure of its stock to the bank with a view to obtain higher amount of overdraft. The explanation was not accepted by the Income-tax Officer with the result that the Income-tax Officer added the amount of Rs. 2,14,682 representing the additional closing stock which was not shown by the petitioner in its books of account. According to the accounts of the petitioner, its closing stock for the assessment year 1959-60 was Rs. 5,89,439 but on account of the above referred addition, its closing stock was calculated at Rs. 8,04,121. Against this order of the Income-tax Officer, the petitioner preferred an appeal before the concerned Appellate Assistant Commissioner but the petitioner failed even in that appeal. Thereafter, the petitioner preferred a second appeal to the Tribunal. While that appeal was pending, the assessment of the petitioner's income for the next year, i.e., the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has led the petitioner to file this petition. The contention of the petitioner is that the order of rectification made by the concerned Appellate Assistant Commissioner is totally without jurisdiction, as it falls outside the ambit of the provisions contained in section 35 of the Income-tax Act of 1922. In this connection, Shri Kaji, who appeared on behalf of the petitioner-assessee, raised two contentions as under : His first contention was that according to section 35 of the Act of 1922, the Appellate Assistant Commissioner concerned is empowered to rectify any mistake which is apparent from " the record of the appeal " decided by him. According to Shri Kaji, the original order passed by the Appellate Assistant Commissioner for the assessment year 1960-61, on 30th June, 1965, could not have been rectified by him relying upon the record of the Tribunal, because the word " record " which appears in section 35 of the Act is limited by the words " of appeal " meaning thereby that the record from which the mistake should be apparent is the record of the appeal in which the Appellate Assistant Commissioner has passed the original order. It was pointed out that what the Appellate A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Officer, v. Circle, Madras v. S. K. Habibullah. In that case, their Lordships of the Supreme Court considered the question whether individual assessment of a partner of a firm can be rectified by reference to the assessment of the firm. While considering this question, their Lordships have held that the mistakes which may be rectified need not be in the order itself ; it may be in any part of the record or proceeding of assessment of the assessee. But for the purpose of assessment, an individual and a firm are distinct entities and even if an individual is a partner of the firm, a mistake discovered because of something contained in the assessment of the firm is not a mistake apparent from the record of assessment of the individual partner. In support of this view, their Lordships have quoted with approval some observations made by Subba Rao C. J. in the case of Kanumarlapudi Lakhshminarayana Chetty v. First Additional Income-tax Officer, Nellore. From, the above referred observations of their Lordships of the Supreme Court, it is apparent that their Lordships are guided more by the fact that a firm is a distinct entity so far as the assessment is concerned and, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the very basis of the different earlier assessments was erroneous because of an initial mistake in determining the written down value, it cannot be said that this would not be a mistake apparent from the record. This decision thus lays down that for the purpose of rectifying the mistake under section 35 of the Act of 1922, the Income-tax Officer can look into the whole evidence on which the original assessment was based. Now, so far as the facts of the present case are concerned, it should be recalled that the opening stock of the assessee-company, for the assessment year 1960-61, was taken at the figure of Rs. 8,04,121 in the original order passed by the Appellate Assistant Commissioner because the closing stock of the previous year was taken on that figure by the Income-tax Officer by making the addition of Rs. 2,14,682. In other words, the closing stock of the previous assessment year 1959-60 formed a part of the evidence for the assessment of the assessee's income for the assessment year 1960-61 and it was on the basis of that evidence that the Appellate Assistant Commissioner allowed the appeal of the assessee for the assessment year 1960-61. Under the circumstances, the evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timately put the valuation of the closing stock for the assessment year 1959-60 became the correct figure of the valuation of the opening stock for the assessment year 1960-61. Therefore, when the Appellate Assistant Commissioner opened the impugned rectification proceedings under section 35 of the Act, what he found was that the figure of Rs. 8,04,121 was not a correct figure inasmuch as that was substituted by the final finding of fact arrived at by the Tribunal. In our opinion, the facts of this case are mostly similar to the facts of the Privy Council case in Commissioner of Income-tax v. Khemchand Ramdas. In that case, the facts were that the assessee did not produce the books of accounts and assessment was made by the concerned Income-tax Officer on the basis of his " best judgment ". The said Income-tax Officer however, allowed the assessee's application for registration of his firm. Since it was treated as a registered firm, no super-tax was assessed. Thereafter, the Commissioner of Income-tax called for the record under section 33 of the Act of 1922 and cancelled the registration of the firm. He also ordered the Income-tax Officer to take necessary consequential action. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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