INCOME TAX OFFICER Vs. MOHANLAL

JUDGEMENT

(1.) THE petitioner is common in all these three writ petitions. He is an income-tax assessee on the file of the Income-tax Officer, B-Ward, Circle I, Hyderabad (the respondent herein). THEse writ petitions are directed against the notices dated October 24, 1969, issued by the respondent to the petitioner under Section 35 of the Indian Income-tax Act, 1922 (hereinafter called as "the old Act"), for the purpose of rectifying the mistakes made in the assessment orders for the years 1955-56, 1956-57 and 1957-58, alleging that the rectification sought to be made by the notices became barred by time long time ago and, thus, the notices issued by the respondent are without jurisdiction and illegal. It is prayed in the writ petitions to restrain the respondent from taking any proceedings in pursuance of the said notices.

(2.) IN order to appreciate the points involved for decision, the necessary facts may be stated thus. There were two sources of income for the petitioner. They are income from two firms. At the time of the three assessments tn question the incomes of one firm only were available and of the other firm was not available because the assessments of that firm were not over. It is not in dispute that with regard to the assessments in question the old Act applies, According to Section 35 of the old Act where in respect of any completed assessment of a partner in a firm or on any reduction or enhancement made in the income of the firm the share of the partner in the profit or loss of the firm has not been included in the assess- ment of the partner or, if included, is not correct, the Commissioner or the Appellate Assistant Commissioner or the INcome-tax Officer, as the case may be, may at any time within four years from the date of the final order passed in the case of the firm rectify any mistake in the completed assessment of the partner. A similar provision also is made in Section 155 of the INcome-tax Act, 1961 (hereinafter called "the new Act"). The dates of assessments for the three years 1955-56, 1956-57 and 1957-58, are respectively June 23, 1956, September 29, 1958, and September 29, 1958, the assessments for the last two years having been completed on the same date. For the first year the INcome-tax Officer took into account nil income with regard to the income from the firm in question. For the last two years tentatively he took the share income of the petitioner at Rs. 2,000. The assessments of the firm for the three years were completed later. They were completed respectively on February 29, 1960, March 30, 1960, and March 30, 1960. According to those assessments the share income of the petitioner in that firm for those three years respectively came to Rs. 5,586, Rs. 23,415 and Rs. 24,856. On completion of the said firm's assessments the previous assessments of the petitioner were rectified by the INcome-tax Officer by including therein the petitioner's share income from the said firm purporting to take action under Section 155 of the new Act. These rectifications were made by the INcome-tax Officer without giving any show cause notice to the petitioner as contemplated under Section 154 of the new Act. A similar provision is also made in Section 35 of the old Act for giving show cause notice.

(3.) IN subsequent decisions it was held that even though the old Act applies with regard to particular assessments for the purpose of rectification even if the notices were given under Section 155 of the new Act, it does not by itself invalidate the rectification. But the department accepted the view taken by the Appellate Assistant Commissioner that the INcome-tax Officer ought to have taken the rectification proceedings by giving notices under Section 35 of the old Act and not under Section 155 of the new Act and allowed the order of the Appellate Assistant Commissioner to become final without taking the matter by way of further appeal. Thus, it is that after the appeals were disposed of by the Appellate Assistant Commissioner the INcome-tax Officer took up the matter again for rectification and issued the impugned notices.