1972 (9) TMI 37 - HC - Income Tax

Retirement of Partner - Reassessment of Firm - These are petitions for the issue of writs of certiorari to quash the orders of the respondent made under section 155 of the Income-tax Act 1961 - Though the petitioner has raised a point in the affidavit that the provisions of section 155 should not be invoked for the assessment years in question and only section 35(5) of the old Act was applicable he was not able to show how under section 35(5) or the provisions of the old Act the revision of assessment could not have been made. Both under the old Act and under the new Act there is power to rectify the partner s assessment consequent on the assessment or reassessment of the income of the firm. The provisions in the old Act and in the new Act in respect of this power are substantially the same - petition dismissed

Summary

Issues:
1. Validity of amending the petitioner's assessment under section 155 after his retirement from the partnership firm.
2. Impact of the deed of relinquishment and deed of indemnity on the petitioner's liability for income tax assessment.
3. Applicability of section 35(5) of the old Act versus section 155 of the Income-tax Act, 1961 for revising the petitioner's assessment.

Analysis:
1. The judgment addresses the issue of amending the petitioner's assessment under section 155 after his retirement from the partnership firm. The petitioner argued that his assessment could not be revised based on the reassessment of the firm post his retirement. However, the court disagreed, citing provisions like section 187 and section 189(1) of the Income-tax Act, 1961. The court held that reassessment could be made on the reconstituted firm, and the petitioner's assessment could be corrected even after his retirement if the reassessment of the firm related to a period when he was a partner, as supported by the judgment in Seth Chimanlal Lalbhai, In re.

2. The judgment also delves into the impact of the deed of relinquishment and deed of indemnity on the petitioner's liability for income tax assessment. The petitioner contended that these documents relieved him of any liability for income tax due by the firm. However, the court ruled that section 155 is not subject to such agreements between parties, and statutory liabilities cannot be waived through private agreements. The court emphasized that even if the petitioner obtained indemnity through the deeds, he remained liable to the income-tax authority as per statutory provisions.

3. Lastly, the judgment addresses the petitioner's argument regarding the applicability of section 35(5) of the old Act versus section 155 of the Income-tax Act, 1961 for revising his assessment. The court noted that the power to rectify a partner's assessment post reassessment of the firm exists under both the old Act and the new Act. The court found no substantial difference in the provisions concerning this power between the old Act and the Income-tax Act, 1961. Consequently, the court dismissed the writ petitions, emphasizing the consistency in the power to revise assessments under both Acts.