1971 (6) TMI 2 - HC - Income Tax

Petitioner was a partner of the firm - originally the firm was assessed in the status of an unregistered firm but firm was given registration later - whether the partner s assessment could be rectified under section 35(5)

Summary

Issues:
1. Interpretation of section 35(5) of the Income-tax Act, 1922.
2. Compliance with directives of the Tribunal for reassessment of a partner in a registered firm.

Analysis:
The judgment by the High Court of MADRAS, delivered by Judge RAMAPRASADA RAO, pertains to a case involving the assessment of income tax for the assessment year 1951-52 of a partner in a firm, initially considered unregistered. The firm contested this assessment and eventually obtained registration status following a High Court decision and a directive from the Appellate Tribunal. The petitioner challenged the subsequent reassessment of their share income as a partner of a registered firm under section 35(5) of the Income-tax Act, 1922.

Regarding the first contention raised by the petitioner's counsel, it was argued that the assessment was invalid as section 35(5) was introduced post the relevant assessment year. However, the court disagreed, emphasizing that the petitioner had actively pursued the firm's registration status, leading to the subsequent reassessment under the applicable law at the time of rectification. The court highlighted the presumption of regularity in official acts and dismissed this argument.

The second contention, not initially presented in the petition, questioned the Income-tax Officer's failure to conduct a fresh assessment on the registered firm following the Tribunal's directive. The court, relying on the presumption of regularity and lack of supporting evidence, rejected this contention, stating that the petitioner cannot raise new challenges after a significant time lapse.

The judgment emphasized that the reassessment was a result of the High Court's order and the Tribunal's directive, aligning with the law in force when the rectification occurred. The court rejected the petitioner's attempt to revert to a pre-1952 status for the firm, emphasizing the legal principle of not being able to benefit from contradictory positions. Ultimately, both contentions were deemed unsuccessful, leading to the dismissal of the writ petition without costs.

In conclusion, the judgment underscores the importance of legal consistency, presumption of regularity in official actions, and the application of the law in force at the time of reassessment. The court's decision reaffirms the validity of the reassessment under section 35(5) and highlights the petitioner's inability to challenge the process retroactively.