2007 (1) TMI 123 - HC - Income Tax

Summary

Issues involved:
The judgment involves the interpretation of rectification u/s 155 of the Income-tax Act, 1961 in a case where the return of the firm had only been lodged, and not where the assessment of the firm had been completed u/s 143(3).

Interpretation of Section 155(1) of the Income-tax Act, 1961:
The court referred to Section 155(1) of the Income-tax Act, 1961, which allows for the amendment of an order of assessment when the assessment had been completed. The term "completed assessment" signifies a positive act of completion, distinct from the expiration of the authority to assess due to the limitation period. The jurisdiction under Section 155 is limited to amending an assessment order to include the correct share as a consequence of firm assessment or income adjustments. This principle was supported by the case of Hansraj Dhingra v. Union of India [1975] 98 ITR 397 (Cal).

Comparison with Calcutta High Court Case:
The court drew parallels with a case before the Calcutta High Court where there was no assessment order u/s 143(3). Similarly, in the present case, the original assessment was made u/s 143(1)(a) and later sought to be rectified u/s 155 after the belated filing of the firm's return. The court agreed with the Calcutta High Court's decision, stating that rectification under Section 155 is impermissible when the assessment is not completed u/s 143(3) and when the firm's return is only lodged.

Conclusion:
The court answered the substantial question of law in the affirmative, favoring the assessee and dismissing the tax case appeal by the Revenue. It was held that rectification u/s 155 is not permissible when the assessment under section 143(3) is not completed, especially when the firm's return is only lodged. No costs were awarded in this matter.