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Issues Involved:
1. Retrospective application of the Income-tax (Amendment) Act, 1953. 2. Jurisdiction of the Income-tax Officer to reopen assessments finalized before 1st April, 1952. Issue-wise Detailed Analysis: 1. Retrospective Application of the Income-tax (Amendment) Act, 1953: The primary contention revolves around whether the Income-tax (Amendment) Act, 1953, can be applied retrospectively to reopen assessments completed before 1st April, 1952. The petitioners argued that the Amending Act is not retrospective and cannot affect assessments finalized before this date. Conversely, the respondent contended that the amendment is declaratory of pre-existing law, allowing for reopening of completed assessments. The court analyzed the relevant statutory provisions, particularly Section 35 as amended by the 1953 Act, which introduced sub-section (5). This sub-section allows for the rectification of a partner's share in the firm's profits or losses based on the firm's final assessment, treating it as a "mistake apparent from the record" and extending the rectification period to four years from the firm's final order. The court referred to established rules of statutory construction, emphasizing that statutes affecting vested rights are prima facie prospective unless explicitly stated otherwise. The court cited authoritative texts and precedents, including Craies on Statute Law, Maxwell on the Interpretation of Statutes, and Halsbury's Laws of England, which collectively assert that retrospective operation should not be presumed unless clearly intended by the legislature. The court concluded that the Amending Act affects vested rights, as it introduces a new basis for reopening finalized assessments and extends the limitation period. Therefore, it should not be construed as retrospective unless explicitly stated. 2. Jurisdiction of the Income-tax Officer to Reopen Assessments Finalized Before 1st April, 1952: The court examined whether the Income-tax Officer had jurisdiction to reopen assessments finalized before 1st April, 1952, under the amended Section 35. The petitioners had a vested right in the finality of their assessment, which could not be disturbed except under the conditions specified in Sections 34 and 35 of the original Act. The court noted that the Amending Act, effective from 1st April, 1952, introduced a fiction to treat certain rectifications as "mistakes apparent from the record." However, this fiction does not apply retroactively to assessments completed before the Act's effective date. The court highlighted that the absence of an express provision for reopening pre-1952 assessments in the Amending Act indicates a legislative intent against such retrospective application. The court also discussed the legislative intent as reflected in specific provisions of the Amending Act that explicitly allowed reopening of assessments for certain years, reinforcing the conclusion that other assessments were not intended to be reopened. The court referenced the decision in Commissioner of Income-tax, Bombay Presidency and Aden v. Messrs. Khemchand Ramdas, which underscored that final assessments could not be reopened except under the specified statutory provisions. The court distinguished this case from the Calcutta High Court's decision in Income-tax Officer, Companies District 1, Calcutta v. Calcutta Discount Co. Limited, which allowed reopening based on a different statutory context. Ultimately, the court held that the Income-tax Officer lacked jurisdiction to reopen assessments finalized before 1st April, 1952, under the amended Section 35. Consequently, the orders dated 20th March, 1954, and 31st March, 1954, were quashed, and the petition was allowed with costs awarded to the petitioner. Conclusion: The High Court ruled that the Income-tax (Amendment) Act, 1953, does not have retrospective effect to reopen assessments completed before 1st April, 1952. The Income-tax Officer lacked jurisdiction to amend such finalized assessments based on the amended provisions. The petition was allowed, and the impugned orders were quashed.
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