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TMI Blog1971 (1) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... f the record rectifiable under section 154 of the Income-tax Act, 1961 ? " The matter relates to the assessment year 1958-59, for which the relevant previous year ended on 31st March, 1958. The assessee is a registered firm carrying on the business of dealing in cement. By a partnership deed dated 1st April, 1956, the firm consisting of 17 partners was constituted. The relevant portion of clause 5 of that deed was in the following terms : " 5. That in case any party wishes to retire from the firm or becomes of unsound mind or permanently incapable of performing . ... partnership will then be reconstituted in accordance with the Partnership Act in force at the time. " One of the partners, L. Mahabir Prasad Jain, died on June 10, 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: -" The assessment order allocated the income among the partners but there was only one allocation. While levying tax on the registered firm, the Income-tax Officer calculated the tax on the income for the second period, i.e., Rs. 1,37,467, but did not include the income for the first period, i.e., Rs. 35,873. The succeeding Income-tax Officer served a notice on the assessee that, since there was a mistake apparent from the record within the meaning of section 154 of the Income-tax Act, 1961, inasmuch as the total income of the firm for two periods comes to Rs. 1,72,760 and whereas it has been taken at Rs. 1,37,467, he proposed to rectify that mistake and if the assessee wished to be heard or put in a representation, he might do so b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 154 of the Income-tax Act, 1961. Mr. A. N. Kirpal, learned counsel for the Commissioner of Income-tax, contends that, though two returns of income were filed by the assessee, the Income-tax Officer passed a single assessment order and it shows that his intention was to tax the assessee in respect of both the periods, and it was only by mistake that he did not add the income computed for the first period to the income of the second period. He further submits that, under section 26(1) of the Indian Income-tax Act, 1922, there was a change in the constitution of the assessee-firm and so the Income-tax Officer had passed one assessment order. Mr. Yogeshwar Dayal, learned counsel for the assessee, contends that the assessee's case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, cannot be an error or mistake apparent from the record. The Supreme Court in Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale held : " An error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the, record. " A Division Bench of the Bombay High Court in Volkart Brothers v. Income-tax Officer, Companies Circle IV (4), Bombay, held : " The power of the Income-tax Officer under section 35 of the Indian Income-tax Act, 1922, or the corresponding section 154 of the Income-tax Act, 1961, is limited to rectification of mistakes which are apparent from the record. An error apparent from the recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from him it shall be recovered from the firm as constituted at the time of making the assessment. (2) Where a person carrying on any business, profession or vocation has been succeeded in such capacity by another person, such person and such other person shall, subject to the provisions of sub-section (4) of section 25, each be assessed in respect of his actual share, if any, of the income profits and gains of the previous year: Provided that, when the person succeeded in the business, profession or vocation cannot be found the assessment of the profits of the year in which the succession took place up to the date of succession, and for the year preceding that year shall be made on the person succeeding him in like manner and to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. As stated above, after the 11th of June, 1957, the assessee carried on business not under the old partnership deed but under a new partnership deed which was executed on the 17th day of June, 1956, and came into effect on 11th June 1956. The assessment order dated 24th November, 1959, shows that depreciation was allowed by the Income-tax Officer separately for the two periods. This fact would indicate that the intention of the Income-tax Officer perhaps was not to club the computed income of the two periods, i.e., the period before 11th June, 1956, and the subsequent period. He also did not assess any tax on the firm for the first period as the income was less than Rs. 40,000. In such a situation the omission of the Income-tax Officer to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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