TMI Blog1962 (1) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... essment or reassessment of the firm disclosing an error made before April 1, 1952. Appeal dismissed. - C.A. 577 OF 1960 - - - Dated:- 24-1-1962 - Judge(s) : S. K. DAS., M. HIDAYATULLAH., J. C. SHAH JUDGMENT The judgment of the court was delivered by SHAH J.--One S. K. Mohideen--(hereinafter referred to as the assessee)--was a partner in two firms--Messrs. Dinshaw and Co. and Messrs. Palaniappa Chettiar and Co. The firms were registered under the Indian Income-tax Act. The assessee submitted returns of his income and incorporated therein the estimated share of his losses in the two firm at Rs. 20,000 and Rs. 10,000 for the assessment year 1946-47 and at Rs. nil and Rs. 12,436 for the assessment year 1947-48. The Income-tax Officer, V Circle, Madras, completed the assessment for the two years on February 20, 1950, after adopting the estimates furnished by the assessee, but he made a note that the losses accepted were subject to revision on ascertainment of correct particulars. The assessment of Messrs. Dinshaw Co. for the years 1946-47 and 1947-48 was completed on October 31, 1950, by the Income-tax Officer, II Circle, Madras, and the proportionate share of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... four years from the date of any assessment order passed by him, on his own motion rectify any mistake apparent from the record of the assessment. The power of rectification may be exercised subject to two conditions : (1) that there is a mistake apparent from the record of the assessment, and (2) that the order of rectification is made within four years from the date of the assessment sought to be rectified. The mistake which may be rectified need not be in the order itself ; it may be in any part of the record or proceeding of assessment of the assessee. But for the purpose of assessment an individual and a firm are distinct entities and even if an individual is a partner of the firm, a mistake discovered because of something contained in the assessment of the firm is not a mistake apparent from the record of assessment of the individual partner. In Kanumarlapudi Lakshminarayana Chetty v. First Additional Income-tax Officer, Nellore, in dealing with the question whether the record of the assessment of the firm may be regarded as the record of the assessment of the individual partner, Subba Rao C.J., speaking for the court, observed and, in our judgment, correctly : " But it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of total income of an assessee in consequence of modifications made in the excess profits tax or the business profits tax payable by an assessee subsequent to an assessment made under the Indian Income-tax Act. Clause (7) dealt with rectification consequent upon modification of orders under section 23A of the Income-tax Act and clause (8), which was enacted (in the form in which it now exists) by the Indian Finance Act, 1956, dealt with the rectification consequent upon proceedings in reassessment under section 34(1)(a) or section 31(1A). The legislature by a fiction in all these classes of cases regarded the inclusion, correction, computation or recomputation as rectification of a mistake apparent from the record and prescribed special termini for reckoning the period of four years within which the rectification must be made. Under clause (5) with which alone we are directly concerned in these appeals, the inclusion of the share in the assessment of the partners or the correction thereof is deemed to be a mistake apparent from the record within the meaning of the section, and sub-section (1) applies thereto accordingly--the period of four years being computed from the date of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 34 and 35 of the Act... and within the time limited by those sections. " The orders of assessment are, subject to the provisions relating to appeals, revisions, reassessment and rectification, final ; it is not open to the Income-tax Officer to reopen the assessment because he thinks fit to do so. The provisions relating to assessments and rectification or reopening thereof are exhaustive, and may not be extended by analogies. The right to rectify an assessment may therefore be exercised in strict compliance with conditions prescribed by the statute in that behalf. Before April 1, 1952, rectification of assessment of an individual on the disclosure of errors consequent upon assessment of the firm of which he is a partner was not for reasons already stated permissible under clause (1) of section 35. This power was conferred for the first time by clause (5) as from April 1, 1952, and by the express words of the clause arose from the assessment of the firm. If by the law prevailing at the time when the assessment of the firm was made, no such result as is contemplated by the new clause (5) arose, to give a larger retrospective operation than is directed, is to ascribe to the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctification of assessments of partners consequential upon the completion of the assessment of the firm in which they are partners, is not indicated. When the legislature under clause (6) of section 35 expressly authorised rectification in the circumstances mentioned therein even if the assessment has been completed before the Indian Income-tax (Amendment) Act, 1953, and it made no such provision in clause (5), it would be reasonable to infer that the legislature did not intend to grant to the revenue authorities a power to rectify assessments falling within clause (5) where the firm's assessment was completed before April 1, 1952. In our view, it was rightly held in Kundan Lal v. Income-tax Officer, Amritsar, following Kanumarlapudi Lakshminarayana Chetty v. First Additional Income-tax Officer, Nellore, that clause (5) of section 35 of the Indian Income-tax Act, which was enacted by the Income-tax (Amendment) Act, 1953, was not declaratory of pre-existing law, and as it clearly affected vested rights which had accrued to the assessee, must be deemed to have come into force from April 1, 1952. It had no greater retrospective effect than was expressly granted to it. The power to r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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