ARTHANARI S Vs. FIRST INCOME TAX OFFICER

JUDGEMENT

(1.) THE petitioner is challenging the order of the Commissioner of Income-tax (Central), Madras-34, the 2nd respondent herein, dated June 10, 1965, which relates to the assessment of the income of the petitioner for the assessment year 1956-57. THE petitioner was a partner in the firm of Ramani Bus Service, Salem, in which his wife was also a partner. THE firm returned provisionally an income of Rs. 17,294 for the assessment year 1956-57. On the basis of the said provisional return of the firm, the petitioner's individual assessment as partner of the firm for the aforesaid year was completed on March 19, 1957. THE firm's final assessment was, however, completed later, on June 28, 1957. In the said order, the Income-tax Officer granted depreciation under the first part of Section 10(2)(vi) as also additional depreciation under Section 10(2)(vib), but did not allow initial depreciation under the latter part of Section 10(2)(vi). This initial depreciation was disallowed on the ground that the bus MDS 2953 for which additional depreciation allowances were granted was put on road by the petitioner and was run for about a fortnight before being transferred to the partnership of Ramani Bus Service. THE firm unsuccessfully appealed on the main order of assessment, and ultimately even in the revision proceedings before the Commissioner of Income-tax the assessment order was confirmed. But, on May 13, 1959, the original authority addressed a letter to the partnership firm under Section 35 of the Indian Income-tax Act, 1922, hereinafter referred to as the Act, proposing to revise the assessment for the year 1956-57 as the additional depreciation allowed in the original order was not correct. THE firm filed its objections on the merits and sought to justify the grant of additional depreciation which was being questioned in the proceedings under Section 35 of the Act. We are not here concerned at this belated stage with the merits on which such allowance was made or disallowance was sought to be maintained. Finally, on January 30, 1961, the original order of assessment made on the firm on June 28, 1957, was rectified under Section 35(1) of the Act. Consequent upon such a rectification of the original order of assessment made on the firm, steps were taken to rectify the order of assessment made on the petitioner as partner of the said partnership firm. Such proposals were initiated under Section 35(5) of the Act on September 9, 1963, and on such rectification the assessment was revised on September 28, 1963. As already stated, the petitioner took up the matter before the Commissioner of Income-tax who, by his impugned order, confirmed the order of the Income-tax Officer dated September 28, 1963. THE challenge is against the order of the 2nd respondent.

(2.) MR. Narayanaswami raised three contentions. Firstly, the order of rectification made on the firm on January 30, 1961, is not warranted in law and the said order is without jurisdiction and should be deemed as non est. On this basis the impugned order is challenged for which reliance is placed on Arulanandam v. Income-tax Officer, Tulicorin, [1961] 42 I.T.R. 229 (Mad.). It is stated that a rectification under Section 35(1) is possible only when there is a mistake apparent on record. The proceedings do not disclose any such apparent error but reflect only a change of opinion. The revenue however states that it was the apparent mistake of allowing an additional depreciation that was corrected later by the order under Section 35(1) and it cannot be deemed to be one passed because of change of view.

(3.) THE second contention based on the plea of limitation has no substance. Section 35(5) is a deeming provision projecting a statutory fiction. It is wholly dependent upon the assessment or reassessment of the firm, in which the assessee concerned is a partner. Reassessment of a firm takes place even if the original order of assessment is rectified under Section 35(1). THE jurisdiction of the officer to act under Section 35(5) being consequential upon such a reassessment of the firm by the appropriate authority, it is to the date of the order of the corrected or rectified assessment of the firm, one should look upon to work out his rights and obligations under Section 35(5). One such right a partner of a firm, which has suffered a reopening of the assessment by rectification, has is to see that the assessment order made on him earlier is not reopened after four years from the date of the final order of rectification and assessment passed in the case of the firm. THE process of assessment is an integrated one though it assumes different shapes in different levels according to the Tribunal dealing with the subject. When it is dealt with by the Income tax Officer, the order is called the assessment order; at the level of the Appellate Assistant Commissioner, it is the appellate order ; with the Commissioner, it is a revisional order ; with the Tribunal it is the Tribunal's order ; on reference it is the High Court's order. But sandwiched between the two available stages of attack as above, the power of rectification is available under Section 35(1). No doubt, it is exercisable within the statutory time prescribed. But, once it is invoked and an order of rectification is made, the1 order of assessment becomes merged in the order corrected by rectification. THE corrected order is then the " statutorily deemed order of assessment " for it would be anomalous to hold that even after correction, a mistaken order ought to prevail. In cases where assessment orders are rectified, the original orders whose mistakes and errors are corrected no longer can hold the field. As pointed out in Vedantham Raghaviah v. Third Additional Income-tax Officer, Madras, [1963] 49 I.T.R, 314, 320(Mad.):