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Issues:
1. Interpretation of sub-section (5) of section 35 of the Indian Income-tax Act, 1922 regarding rectification of mistakes in assessments. 2. Applicability of the Income-tax (Amendment) Act, 1953 to assessments finalized before April 1, 1952. Analysis: Issue 1: Interpretation of sub-section (5) of section 35 of the Indian Income-tax Act, 1922 regarding rectification of mistakes in assessments The case involved a dispute regarding the rectification of a mistake in the assessment of a partner in a firm following the re-assessment of the firm's taxable income. The appellant contended that the rectification could not be made under sub-section (5) of section 35 as his assessment had been finalized before the retrospective effect date of the amending Act. However, the court held that sub-section (5) allows for rectification within four years from the final order passed in the case of the firm. The provision deems the inclusion or correction of a partner's share in the assessment as a rectification of a mistake apparent from the record. The court emphasized that the sub-section does not give retrospective operation beyond what was provided in the amending Act itself. The rectification in the appellant's case was found to be within the scope of sub-section (5) as the re-assessment of the firm occurred after April 1, 1952, even though the original assessment was completed earlier. Issue 2: Applicability of the Income-tax (Amendment) Act, 1953 to assessments finalized before April 1, 1952 The appellant argued that the assessment finalized before April 1, 1952, could not be reopened under the provisions of the amending Act. The court, however, clarified that the retrospective effect of the amending Act was limited to the assessment or re-assessment of a firm and did not extend further back. The court held that once a re-assessment of the firm was conducted after April 1, 1952, the rectification of a mistake in the partner's assessment could be made within four years from the final order passed in the case of the firm. The court found no inconsistency in this approach and upheld the validity of the rectification made in the appellant's case within the statutory period. In conclusion, the court dismissed the appeal, emphasizing that the rectification was in line with the provisions of sub-section (5) of section 35 and was conducted within the prescribed timeframe. The judgment reaffirmed the statutory framework for rectifying mistakes in assessments following re-assessments of firms under the Indian Income-tax Act, 1922.
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