TMI Blog1964 (2) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... a partner in two firms: (1) Ganesh Prasad Dalal (which for the sake of brevity will be known as firm G ), and (2) Bhojnagarwala Brothers (which for the sake of brevity will be known as firm B ). Now it is established that these are two distinct firms but at one time there was a dispute whether they were distinct firms, whether one of them was not a branch of the other. For the assessment year 1943-44, the assessee submitted a return showing separately his incomes from the partnership in the two firms. According to the return the two firms existed distinctly from each other. An Income-tax Officer assessed the firm G on the incomes from the two firms holding that the so-called firm B was not a distinct firm and was a mere branch of firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing the assessee of this fact. According to the assessment order passed against firm B the assessee's share in the income from it was higher than that shown by him in his return. The Income-tax Officer once more rectified the assessment order passed against the assessee and added to the income on which he had assessed him previously the income derived by him from firm B . Thereafter, he issued a notice of demand for the excess income-tax. The assessee did not comply with the notice of demand and the Income-tax Officer imposed a penalty upon him. The assessee filed an appeal against the order imposing penalty on the ground that the assessment order passed a second time was illegal, because the procedure prescribed under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat income chargeable to income-tax has escaped assessment for any year he may serve upon the assessee a notice containing certain requirements and proceed to assess or reassess him on the escaped income. Section 35(1) is to the effect that the Income-tax Officer may within a certain time of the assessment order passed by him on his own motion rectify any mistake apparent from the record . . . of the . . . assessment ... The circumstances in which an order under section 34(1) and an order under section 35(1) can be passed are not mutually exclusive and may overlap. There is nothing in the provisions of the two sections to suggest any conflict between them of such a nature that the provisions of one section will not apply if those of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the income included incomes from both the firms, the Income-tax Officer assessing the assessee had to take it to be the income from firm G only and ought to have added to it the income from firm B , of which the assessee was a member according to the return itself. His failure to add it is not explained by anything on the record and must be attributed to an oversight on his part. In other words, there was a mistake apparent on the record of the assessment of the assessee when the first assessment order was passed. When he rectified the assessment order on the assessable income of firm G being reduced, he continued the mistake by ignoring the assessee's income from the other firm. Since he had assessed him only on the income co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not at all touch the apparent mistake rectified by him subsequently. Rectification of one apparent mistake under section 35(1) does not prevent subsequent rectification of another apparent mistake under the same provision. It was immaterial either that the assessee's return itself had shown that he derived income from both the firms or that the income shown by him as derived from firm B was less than the income communicated to the assessing authority by the Income-tax Officer assessing firm B as the income derived by the assessee from it. Neither of these facts converted the omission to include the income from firm B in the assessable income an escape of income from assessment or removed it from the category of mistakes apparent o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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