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Issues:
Assessment under Indian I.T. Act, 1922; Rectification under I.T. Act, 1961; Applicability of s. 35(5) of the 1922 Act. Analysis: The judgment pertains to three income-tax references involving the assessments of partners of a firm for the year 1961-62. The initial assessments were made under s. 23(3) of the Indian I.T. Act, 1922. Subsequently, rectifications were carried out under s. 154 of the I.T. Act, 1961, leading to an enhancement in the firm's income. The rectifications were challenged by the assessees, contending that they could only be made under s. 35(5) of the 1922 Act, not the 1961 Act, citing the Supreme Court decision in S. Sankappa v. ITO [1968] 68 ITR 760. The Appellate Tribunal upheld the assessees' position, emphasizing that rectifications beyond four years from the original assessment order could not be supported under s. 35 of the 1922 Act. The Tribunal concluded that the rectifications could not be salvaged by invoking s. 155 of the 1961 Act. The Commissioner then sought a reference to the High Court, questioning the validity of the rectification orders dated February 15, 1968. The High Court noted that the rectifications fell within the purview of s. 35(5) of the 1922 Act, allowing for corrections in partner assessments based on changes in the firm's income. The Court emphasized the broad interpretation of "assessment or reassessment" in s. 35(5) to include rectifications, citing relevant case law. The Court held that the ITO had the authority to rectify the assessments under s. 35(5) of the 1922 Act, despite erroneously referencing s. 155 of the 1961 Act. In conclusion, the High Court ruled in favor of the revenue, affirming the validity of the rectification orders under s. 35(5) of the 1922 Act. The Court highlighted previous decisions supporting this interpretation and awarded costs to the revenue.
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