TMI Blog1981 (4) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... as orders passed under section 154 of the Act ? " The assessee, Smt. Swaran Yash, is assessed as an individual. She is partner in a registered firm known as,"Daily Milap (jullundur) ". Her assessment for the assessment year 1963-64 was completed on December 28, 1967/January 3, 1968. The total income assessed in her hands included her share income from the firm of Daily Milap (jullundur). But this was taken " subject to rectification on the completion of the assessment of the firm ". A salary of Rs. 6,200 from the above firm was also included in her assessment. Similarly, for the assessment year 1964-65 she was assessed on the share income (subject to rectification as aforesaid) and salary income by an assessment order dated July 9, 1968. On February 5, 1968, the assessment of Daily Milap (Jullundur) was completed by the ITO for the assessment year 1963-64. The total income of the firm was determined at Rs. 73,016 and this was allocated amongst three partners, Chander Prakash (50%), Mrs. Swaran Yash (25%) and Vishva Kirti (25%). As a postscript to the assessment order there is also an order under s. 184(7) which records that the declaration filed in Form No. 12 was in order and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment orders of the firm. Thus, the Tribunal observed, the income assessed against these individual partners had been made part and parcel of the assessment order of the firm. The mistake made therein of not including the minor's income in the share of the mother which was sought to be rectified was, according to the Tribunal, a mistake which could clearly be rectified under s. 154 being a glaring and an obvious mistake of law. The Tribunal, therefore, held that the orders of the ITO in substance and for all intents and purposes could justifiably be treated as orders under s. 154. They were, therefore, upheld and the assessee's appeals were dismissed. The assessee has come on a reference to this court. Shri M. L. Verma, learned counsel for the assessee, raised two contentions. He pointed out that according to the Department the rectification was being effected as a result of the assessment orders on the firm. He contended that the records of the firm cannot be treated as part of the assessee's records for purposes of rectification. Learned counsel also pointed out that there was nothing shown to exist either in the assessee's records or in the records of the firm to indic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicability of s. 35(1) to the facts of the case. Shah J. (as he then was) speaking for the court observed (p. 811) : " Section 35(1) empowers the income-tax authorities to rectify mistakes apparent from the record of certain orders passed by them. The clause (omitting parts not material) provides that the Income-tax Officer may at any time within four years from the date of any assessment order passed by him, on his own motion rectify any mistake apparent from the record of the assessment. The power of rectification may be exercised subject to two conditions : (1) that there is a mistake apparent from the record of the assessment, and (2) that the order of rectification is made within four years from the date of assessment sought to be rectified. The mistake 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 individu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vations. It is true that in subsequent decisions the Supreme Court has had occasion to consider the scope of the retrospective effect of the various subsections of s. 35. In ITO v. T. S. Devinatha Nadar [1968] 68 ITR 252 (SC) the majority of judges (on the Bench) of the Supreme Court overruled the decision in Atmala Nagaraj [1962] 46 ITR 609. This decision has also been subsequently followed by the Supreme Court in CIT v. K. S. Rashid [1972] 85 ITR 118 (SC) and CIT v. Onkarmal Meghraj [1974] 93 ITR 233 (SC). Even some years earlier, a Full Bench of the Punjab High Court in Ram Bhagat v. CIT [1966] 61 ITR 146, had suggested that the decision in Habibullah [1962] 44 ITR 809 (SC) and Atmala Nagaraj [1962] 46 ITR 609 (SC), required reconsideration and this has been done by the Supreme Court in the decisions above cited. However, these three decisions of the Supreme Court do not in any way whittle down the effect of, the judgement either in the Habibullah case or in the case of Atmala Nagaraj in regard to the aspect that is under consideration in the present case. The observations of the Supreme Court in these two decisions that for purposes of rectification the assessment record of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Daily Milap (Jullundur). Learned counsel for the Revenue contended that in view of this admitted fact referred to in the statement of case the assessee cannot challenge the existence of a mistake apparent from the record. To us it appears that the argument of the learned counsel proceeds on a misconception. It is no doubt true that after the rectification was made and in the course of the proceedings before the AAC and the Appellate Tribunal the assessee was not in a position to challenge the correctness of the fact that the minor son, Vishva Kirti, was admitted to the benefits of the partnership in which Mrs. Swaran Yash was a partner. But the question is not whether after the rectification was made this position is admitted or not. The question is whether at the time of original assessment or at any time before the rectification was made there was anything on the record which disclosed the relationship between these two persons, for, unless the relationship was clear from the available record, there would be no " mistake " needing correction. As we have already pointed out, it is not the Department's case that there is anything in the record of the present assessee indicating t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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