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TMI Blog1957 (4) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... October, 1950. As against the ₹ 20,000 provisionally accepted as the assessee's share of the loss for 1946-47, ₹ 15,839 was ascertained as his share. For the assessment year 1947-48 the assessee's share of the loss was ascertained as ₹ 1,046 ; the provisional basis for assessment was ₹ 10,000. The assessment of the firm of Palaniappa Chettiar for 1947-48 was completed on 30th June, 1951, when the assessee's share of the losses was determined as ₹ 2,009 as against the provisionally accepted figure of ₹ 12,346. Act XXV of 1953, which amended section 35 of the Income-tax Act (hereinafter referred to as the Act) and added sub-clause (5) to section 35, received the assent of the President on 24th May, 1953. But, as section 1(2) of Act XXV of 1953 directed that this amendment among others should be deemed to have come into force on 1st April, 1952, the position was as if section 35(5) had become part of the Act on 1st April, 1952. On 4th May, 1953, that is, even before the Act XXV of 1953 received the assent of the President the Income-tax Officer issued a notice to the assessee under section 35 of the Act to show cause why the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stake which has been brought to his notice by an assessee . Section 35(5) which as we pointed out must be deemed to have been part of the Act on 1st April, 1952, ran : Where in respect of any completed assessment of a partner in a firm it is found on the assessment or re-assessment of the firm or on any reduction or enhancement made in the income of the firm ..that the share of the partner in the profit or loss of the firm has not been included in the assessment of the partner or, if included, is not correct, the inclusion of the share in the assessment or the correction thereof, as the case may be, shall be deemed to be a rectification of a mistake apparent from the record within the meaning of this section, and the provisions of sub-section (1) shall apply thereto accordingly, the period of four years referred to in that sub-section being computed from the date of the final order passed in the case of the firm . The principal contention of the learned counsel for the assessee was that the provisions of section 35(5) could not be applied to any assessment completed before 1st April, 1952. He relied on Lakshminarayana Chetti v. Additional Income-tax Officer, Nellore [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but when it was enacted on 24th May, 1953, section 35(5) was given effect from an anterior date 1st April, 1952. Thus the Income-tax Officer had jurisdiction to exercise the powers vested in him by section 35(1) as well as those vested in him by section 35(5) on 4th May, 1953, and thereafter. There is one feature of this case to which we shall advert at this stage. The learned counsel for the Department was, in our opinion, right in his contention, that in the circumstances of this case, the assessment of Mohideen for 1946-47 and 1947.48 could have been rectified under section 35(1) itself, as it was really a case of rectifying a mistake apparent on the face of the record of assessment. The assessment orders dated 20th February, 1950, specifically referred to the shares of the assessee in the losses sustained by the two firms of which he was a partner, Dinshaw and Co., and Palaniappa Chettiar. They were determined on a provisional basis. The determination was provisional till the assessments of Dinshaw and Co. and Palaniappa Chettiar could be completed. The assessment orders specifically recorded that the assessments of Dinshaw and Co. and Palaniappa Chettiar had not been comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 35(1) being computed from the date specified in section 35(5). The necessity to enact a legal fiction by which something which is not a mistake apparent on the face of the record is deemed to be such a mistake is wholly inconsistent with the view, that section 35(5) was merely declaratory of the previous law on the subject as embodied in section 35(1) and as implied in these provisions. We are in respectful agreement with the dictum of Subba Rao, C.J., in Lakshtninarayana Chetti v. Additional Income-tax Officer, Nellore [1956] 29 ITR 419 at 425 , that section 35(5) was not declaratory of a pre-existing law. Section 35(5) authorised a new class of mistakes to be rectified ; what had not hitherto been a mistake apparent on the face of the record of assessment within the meaning of section 35(1) became such a mistake by the operation of the legal fiction enacted by section 35(5). That mistake also could thereafter be rectified in addition to the mistakes for the rectification of which provision had already been made in section 35(1). The power to rectify what we can conveniently refer to at this stage as fictional mistakes was vested in the Income-tax Officer on 1st Apri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to assessments completed before 1st April, 1952. In our opinion, on 27th March, 1954, the Income-tax Officer had no jurisdiction to rectify the assessments of the assessee for the assessment years 1946-47 and 1947-48. The learned counsel for the Department pointed out that the order of the Commissioner dated 30th September, 1955, confirmed the rectification ordered by the Income-tax Officer with reference to the assessment years 1946-47 and 1947-48, and further directed rectification of the assessment for 1948-49, under which the petitioner would be entitled to a considerable amount of relief. The petitioner in these proceedings attacked only the validity of the rectification ordered by the Income-tax Officer and confirmed by the Commissioner with reference to the assessment for the assessment years 1946-47 and 1947-48. The learned counsel for the Department was right in his contention, that the assessee should not be permitted by any order of ours to retain a benefit that accrues to him under the order dated 30th September, 1955, while avoiding the liability imposed upon him by that order. The petition is allowed and the rule will be made absolute. The entire order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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