TMI Blog1964 (3) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... its assessment should not be reopened under section 35(5) of the Act. The stand taken up by the Kaithal firm was that, as the assessment had been concl uded before the 1st April, 1952, no action could be taken in the matter under section 35(5). This contention was rejected by the Income-tax Officer and so also in revision by the Commissioner. This has led to the present petition under article 226 of the Constitution. The short contention raised is that the Income-tax Officer had no jurisdiction to reopen the assessment which had become final before the 1st April, 1952. The matter is not bare of authority and the decisions of the Supreme Court are opposed to one another. In Income-tax Officer v. S. K. Habibullah, it was held by their Lordships of the Supreme Court that the assessment of a partner as well as the assessment of the partnership in which he is a partner, which assessment had been completed and had become final before April 1, 1952, would not be covered by section 35(5) of the Act and thus such an assessment could not be reopened. In Kundan Lal v. Income-tax Officer, in a case decided by this court, it was held that where the partner's assessment had become final b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not rightly noticed by their Lordships of the Supreme Court. In any case, as the entire matter has to be decided by a larger Bench, this matter will also be decided by that Bench. I, therefore, direct that the papers of this case be laid before my Lord the Chief Justice for constituting a larger Bench and, in the circumstances, preferably a Bench of three judges to decide this case. JUDGMENT OF THE FULL BENCH This case has been referred to the Full Bench at the instance of my learned brother, D. K. Mahajan J., the reason being certain conflict of authorities bearing on the point involved in the case. Briefly the facts are that Messrs. Fateh Chand-Jai Ram Das of Kaithal, a joint Hindu family firm (to be referred to as the Kaitbal firm), was a partner in the firm, Messrs. Ambala Flour Mills, Ambala City, the former's share being four annas in the rupee. For the assessment year 1948-49, the aforesaid share of the Kaithal firm was assessed at Rs. 7,499 and this assessment was finalised on the 15th September, 1950. However, the assessment of Messrs. Ambala Flour Mills was reopened under section 34 of the Indian Income-tax Act, 1922 (Act No. XI of 1922), hereinafter to be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on his own motion rectify any mistake apparent from the record of the appeal, revision, assessment or refund, as the case may be, and shall within the like period rectify any such mistake which has been brought to his notice by an assessee." The only other provision which needs notice is sub-section (5), which is as follows : " Where in respect of any completed assessment of a partner in a firm it is found on the assessment or reassessment of the firm or on any reduction or enhancement made in the income of the firm under section 31, section 33, section 33-A, section 33-B, section 66 or section 66-A that the share of the partner in the profit or loss of the firm has not been included in the assessment of the partner or, if included, is not correct, the inclusion of the share in the assessment or the correction thereof, as the case may be, shall be deemed to be a rectification of a mistake apparent from the record within the meaning of this section, and the provisions of sub-section (1) shall apply thereto accordingly, the period of four years referred to in that sub-section being computed from the date of the final order passed in the case of the firm." In support of the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in respect of the two years in question after taking into account the share of the losses as computed in the assessments of the two firms. The Commissioner of Income-tax, to whom the assessee went in revision, held that section 35 was properly invoked for rectification of the assessment and rejected the applications. The Madras High Court allowed the writ petitions under article 226 of the Constitution filed by the assessee and quashed the order of the Income-tax Officer. The appeal by the Commissioner of Income-tax, Madras, to the Supreme Court failed. In a Bench decision of this court in Kundan Lal v. Income-tax Officer, it was held that the Income-tax Officer had jurisdiction under section 35(5) of the Act to rectify an assessment of a partner of a firm completed in 1946, on a reassessment of the firm under section 34 made in March, 1956, which necessitated the inclusion of the partner's correct share of the profits in his assessment. Though it is correct that in Habibullah's case the learned judges referred with approval to certain observations in Kundan Lal's case, yet that approval was not to the decision of the case on the facts, but to the principle enunciated, which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... future occasion but they also emphasised that they did not express a final opinion on sub-section (5) of section 35 but would leave that to a future case. Sarkar J., who agreed with Hidayatullah J. and Raghubar Dayal J. in holding that the appeal be dismissed, was of the view that Habibullah's case 1, as well as Atmala Nagaraj's case, were entirely different from the case before the court as the language used in sub-sections (5) and (10) of section 35 seems to be wholly different. Mr. Puran Chand, learned counsel for the petitioner, has also emphasised that despite the doubts which some of the judges constituting that Bench in Ahmedabad Manufacturing and Calico Printing Company's case, expressed as to the correctness of the decision in Habibullah's case and Atmala Nagarai's case, they were cautious to say that they were not expressing any final view on the scope of sub-section (5) of section 35 and that would have to be done at some future date when the appropriate occasion arose. So, Mr. Puran Chand argued that this court cannot assume to itself the functions of the Supreme Court, and so far as it is concerned, the authority of the Supreme Court in Atmala Nagaraj's case holds th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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