TMI Blog1985 (4) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Indian Income-tax Act, 1922, could be carried out under the provisions of section 155(4) of the Income-tax Act, 1961 ?" The assessee is a private limited company carrying on the business of manufacturing and selling paints and colours. In the assessment year 1949-50, a loss return was filed showing a loss of Rs. 24,018. The assessment was completed under section 23(3) of the Indian Income-tax Act, 1922 ; most of the loss was allowed and adjustments were made regarding earlier losses which were being carried forward from earlier years and there was also some adjustment regarding depreciation. In the result, Rs. 44,355 was allowed by the Income-tax Officer to be carried forward for future years. In the assessment year 1950 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a penalty of 20 per cent. should be imposed under section 271(1)(c). This led to the finalisation of the reassessment for the assessment year 1949-50. The result was that the quantum appeal was rejected and a penalty under section 271 (1)(c) was imposed. The result of these proceedings on the following two years 1950-51 and 1951-52 was that a carried forward loss which did not exist had been allowed to be adjusted against the income of these two years. The Incometax Officer in these circumstances took action under section 155 of the Income-tax Act, 1961, on the ground that there was a mistake apparent from the record which should be rectified under section 155(4). Show cause notices were issued to the assessee. As a result of rectif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 155(4) were treated as an elaboration of the powers already existing under section 35 of the 1922 Act. In other words, the Tribunal came to the conclusion that section 35 of the 1922 Act was available and a mere mention of the wrong section would not affect the merits of the rectification. These are the circumstances in which this reference had been submitted to this court. It is clear from the reasoning of the Tribunal that the view which prevailed was that section 155(4) was somewhat similar to section 35 of the 1922 Act. For purposes of convenience, the two provisions can be quoted here. Section 155 deals with amendments and sub-section (4) states as follows: "(4) Where as a result of proceedings initiated under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, was this also permitted under the 1922 Act ? According to the Tribunal, section 35 of the 1922 Act contains such a power. Section 35 was the section relating to rectification of a mistake or mistakes. The section is a long section which need not be reproduced in full here. The operative part of section 35(1) is: " The Commissioner or Appellate Assistant Commissioner may, at any time within four years from the date of any order passed by him in appeal or, in the case of the Commissioner, in revision under section 33A and the Income-tax Officer may, at any time within four years from the date of any assessment order or refund order passed by him on his own motion, rectify any mistake apparent from the record of the appeal, revision, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " where a return of income has been filed before the commencement of this Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed." Therefore, in respect of the assessments for 1950-51 and 1951-52, the new Act had to be disregarded and consequently section 155(4) of the new Act could not be applied to a proceeding under the old Act. If any authority is required for this obvious proposition, reference may be made to J. P. Jani, ITO v. Induprasad Devshankar Bhatt [1969] 72 ITR 595 (SC), where an Income-tax Officer issued a notice under section 148 of the Income-tax Act, 1961, to reopen the assessment of an assessee which was barr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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