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Assessment of share income of the assessee's wife in the total income of the assessee, rectification order under sections 154 and 155 of the Income Tax Act, 1961, time limitation for rectification, applicability of section 155(1) in the case. Analysis: The judgment pertains to the assessment of the share income of the assessee's wife in the total income of the assessee for the assessment year 1963-64. Initially, the Income Tax Officer (ITO) accepted the return filed by the assessee, which did not include the wife's share income in the total income. However, in a subsequent reassessment under sections 147/148, the ITO included the wife's share income in the total income of the assessee. The Appellate Authority Commissioner (AAC) reversed this decision, stating it was not a case of escapement. The Tribunal also upheld the AAC's decision. Meanwhile, the assessment of the firm, in which both the assessee and his wife were partners, was completed. Despite this, the ITO did not assess the wife's share of income in the hands of the husband at that time. In response to the Tribunal's decision, the ITO attempted to rectify the mistake under sections 154 and 155 of the Income Tax Act, 1961. The AAC quashed the rectification order, deeming it unjustified. The Tribunal held that the rectification order was time-barred under section 154, as it was passed more than four years after the original assessment order. The Tribunal also found section 155 to be inapplicable in this case. The Tribunal dismissed the appeal filed by the revenue, leading to the Commissioner raising a question of law for the High Court's opinion. The High Court analyzed sections 154 and 155 of the Income Tax Act, 1961. Section 154 allows the ITO to rectify an order of assessment if there is a mistake apparent from the record and the rectification is made within four years from the date of the original order. Section 155 provides exceptions to this rule, including the non-inclusion of a partner's share in the assessment. The court determined that section 155(1) did not apply in this case, as the mistake was already evident on the assessment record and not discovered in consequence of the firm's assessment. Therefore, the court held that the rectification order under section 154 was time-barred, being passed more than four years after the original assessment order. Consequently, the High Court held that the action under section 155(1) was incompetent and that under section 154 was time-barred. The court answered the question referred in the affirmative, in favor of the assessee and against the department, awarding costs to the assessee.
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