9911796707
TMI Blog1990 (9) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... . For the assessment year 1970-71, the assessee filed a return disclosing her share income from the said Admiralty Flats Motel at Rs. 24,735 and in Part IV of the return, she had given the names of the other three persons as the other partners thereof, each being entitled to a one-fourth share. Similarly, returns were also filed for the assessment years 1971-72 and 1972-73, disclosing her share income at Rs. 29,085 and Rs. 13,609, respectively. Originally, the Income-tax Officer finalised the assessments for these three assessment years, determining the assessee's income tentatively as "nil" on the ground that, as per the order dated January 31, 1972, in relation to the assessment year 1969-70 in the case of P. V. Gajapathi Raju, the karta of the Hindu undivided family, there was no genuine partnership in existence and the entire income of Admiralty Flats Motel was assessable in the hands of the Hindu undivided family. Nevertheless, the Income-tax Officer, in the assessment orders for the three assessment years in question, had also stated that the assessments would be revised, if necessary, as per the decision of the appellate authorities (presumably with reference to the order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 1970-71 and 1971-72, but in respect of the assessment year 1972-73, as one of the daughters, by then, had become a major, only the share income of the other minor daughter was clubbed with the income of the assessee. On appeal by the assessee to the Appellate Assistant Commissioner, contesting the validity of the initiation of proceedings under section 155 of the Act and also the inclusion of the income in the assessment of the assessee for the three years in question, applying section 64(1) of the Act, the Appellate Assistant Commissioner, while dismissing the appeals and upholding the order of the Income-tax Officer, observed as under : "The provisions of section 64 are mandatory and it is not as if the principle of clubbing of income itself is in dispute. In fact, it was conceded by the representative that the share incomes of the minor children are to be clubbed in the hands of the appellant, but the only issue was whether the provisions of section 64 could be given effect to in an order of rectification under section 155 of the Act. This order under section 155 of the Act is not merely rectificatory, but has arisen as a consequence of the appellate decision as a result of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income of the firm has not been included in the assessment of the partner or, if included, is not correct, the Income-tax Officer may amend the order of assessment of the partner with a view to the inclusion of the share in the assessment or the correction thereof, as the case may be, and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from the date of the final order passed in the case of the firm." The corresponding provision, in section 35(5) of the Indian Incometax Act, 1922, was as under : "Where in respect of any completed assessment of a partner in 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 33A, section 33B, section 66 or section 66A 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 rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmitted by him may be apparent from the record but such mistakes cannot be rectified under section 155. That section deals with amendment of the assessment of partner or a member of a firm or association under circumstances mentioned therein. It has nothing to do with mistakes apparent or otherwise." Likewise, the following observations in CIT v. M. M. Thimmaiah [1968] 67 ITR 180, 184 (Mys) are also apposite. "Our opinion is sought on the solitary question whether, while acting under section 155, the Incometax Officer could have changed the basis of taxation. In other words, whether he could have treated any portion of the income as unearned income which he had earlier treated as earned income by having recourse to his power under section 155. It may be that the Income-tax Officer erred in treating that portion of the income as earned income. The mistake committed by him may be apparent from the record. But such mistakes cannot be rectified under section 155. That section deals with amendment of assessment of a partner or a member of a firm or association under circumstances mentioned therein. It has nothing to do with mistakes apparent or otherwise." No doubt, section 155 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce placed by learned counsel for the assessee upon the decision in T. S., Balaram, ITO v. Volkart Brothers [1971] 82 ITR 50 (SC) where it was held that the Income-tax Officer has no jurisdiction under section 154 of the Act to rectify the assessment of firm, originally made under section 17(3) of the Indian Income-tax Act, 1922, in a case of doubtful applicability of section 17(1) to the firm, the mistake could not be regarded as apparent from the record, would not also be of any assistance to the assessee. No doubt, it was observed by the Supreme Court that a mistake apparent from the record must be an obvious and patent mistake and not one which can be established by a long drawn out process of reasoning on points on which there may conceivably be two opinions. But such is not the case here. Reference was also made to Jiyajeerao Cotton Mills Ltd. v. ITO [1981] 130 ITR 710 (Cal) and Addl. CIT v. Shree Shankar and Co. [1979] 118 ITR 636 (Mad). In those cases, it has been held that rectification presumably was of a debatable assessment and that there was no provision for rectification of an order passed under section 183(b) on the firm, in the light of the return submitted by, or th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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