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Issues:
Interpretation of the Indian Income Tax (Amendment) Act, 1953; Application of Section 35 of the Income Tax Act; Retrospective effect of the Amendment Act. Analysis: The judgment by the Bombay High Court, delivered by M.C. Chagla, C.J., and S.R. Tendolkar, J., pertains to a petition filed by the Bombay Dyeing and Manufacturing Co. challenging an assessment order issued by the Income Tax Officer. The main issue raised in the petition was the construction of the Indian Income Tax (Amendment) Act, 1953, specifically focusing on Section 18A(5) of the main Act. The Amendment Act, passed on 24th May, 1953, amended Section 18A(5), impacting the interest calculation on advance payments made by assesses. The petitioner contended that the subsequent amendment affected the credit granted to them, leading to a demand notice issued by the Income Tax Officer for a balance amount. The petition challenged the notice on the grounds of lack of notice before the order and the jurisdiction of the Officer under Section 35 of the Act. The Court delved into the applicability of Section 35, which empowers the Income Tax Officer to rectify mistakes apparent from the record. The crucial question was whether a mistake was evident in the assessment order of 1952, considering the subsequent amendment. The Court emphasized that the error contemplated under Section 35 must be apparent on the face of the original order, based on the law prevailing at the time of assessment. The retrospective effect of the Amendment Act, deeming it effective from April 1, 1952, was discussed, with the Court concluding that the Officer's actions did not align with the Act's provisions. The Court highlighted that the Act explicitly granted the power to revise completed assessments under specific sections, which were not invoked in this case. Referring to a Privy Council decision, the Court distinguished the present case from the precedent, emphasizing that the assessment order was made based on the prevailing law at that time. The liability of the petitioner was determined as per the law in force during the assessment, and subsequent amendments did not warrant a revision of the assessment order. Consequently, the Court held that the notice demanding additional payment from the petitioner was not legally justified, leading to the issuance of a writ against the Income Tax Officer in favor of the petitioner. In conclusion, the Court directed the respondents to bear the costs incurred by the petitioner, thereby resolving the issues raised in the petition through a detailed analysis of the relevant legal provisions and precedents.
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