KANWAL NARAIN KHANNA Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS is a petition under article 226 of the Constitution and it arise out of the following facts and circumstances.

(2.) IN the case of the assessment year 1948-49 the Delhi Talkies Bureau on assessment was again found to have suffered a loss and the petitioners share of that loss arrived at was Rs. 77,405. IN the petitioners assessment for the year 1948-49, this loss of his share from the Delhi Talkies Bureau was take into consideration and when set against his income from other sources, the result was that his assessment showed a loss of Rs. 26,592. Subsequently the 1948-49 assessment of the Delhi Talkies Bureau was revised and on revision its loss was reduced, in consequence of which the petitioners share of loss was reduced for Rs. 77,405 to Rs. 16,488. Once that was done, the INcome-tax Officer gave notice to the petitioner of February 23, 1956, of his intention to rectify his assessment of the year 1948-49, under section 35 of the INdian INcome-tax Act. He stated in the notice that he was according an opportunity to the petitioner to file his objections, if any, on or before February 29, 1956, at 10-30 a.m. He also stated in the notice that the petitioner was to bring receipts of payments made, if any, for the year 1946-47, so that necessary adjustments may be made in the case.

(3.) IT was by the Indian Income-tax (Amended) Act, 1953 (XXV of 1953) that this sub-section was added to section 35 and that came into force from April 1, 1952. In other words, any mistake being a mistake apparent from the record, even with the aid of new sub-section (5) of section 35 from April 1, 1952, gives power to the Income-tax Officer of rectification in the assessment of a particular person. The learned counsel for the petitioner contends that even though sub-section (5) of section 35 operates from April 1, 1952, it is not retrospective so as to affect the vested rights of the petitioner already in existence before that date. IT is said that the assessment for the year 1948-49 was pending on April 1, 1952, and was not completed unit March 1, 1953. IT was, therefore, completed after the enforcement of sub-section (5) of section 35 of the Act. The position taken by the learned counsel for the petitioner is that the proceedings for the assessment in the case of assessment year 1948-49 having started in that assessment years, all the rights attached to those proceedings in the shape of rights of appeal and revision continued to attach to the proceedings until they were finally disposed of and that any introduction of a new provision, unless expressly or by necessary implication taking away such rights of the petitioner, could not possibly so operate as to deprive the petitioner of those rights. IT is said that before enactment of sub-section (5) of section 35 of the Act rectification of the type as in this case was not within the scope of sub-section (1) section 35 of the Act because it was not a mistake apparent from the record of the assessment itself. IT can only be said to be something arising out of the assessment proceedings of another person and in this case that happened to be the Delhi talkies Bureau. There was really no mistake in the assessment of the petitioner. On the assessment of the Delhi talkies Bureau his share of loss was settled, and on revision of the assessment of the Delhi Talkies Bureau, his share of loss was reduced. There was no mistake in so far as the record of his assessment was concerned. The correction was necessitated not by mistake but by a conscious and positive act of the income-tax authorities in relation to the assessment of some other assessee, even though the petitioner was a partner of that assessee. This appear to me to be the correct position and a similar view has been expressed by the learned Judges in Kanumarlapudi Lakshminarayana Chetty v. First Additional Income-tax Officer, Nellore. IT is true that sub-section (1) of section 35 of the Act, without the help of the new sub-section (5), would not have applied to the case of the petitioner, but then, as pointed out, the assessment order with regard to the assessment year 1948-49 so far as the petitioner is concerned, was made on March 1, 1953. The assessment of the Delhi Talkies Bureau for the assessment year 1948-49 was revised after that date. IT was after that that the Income-tax Officer was looking at the record of the assessment of the petitioner and it was then that the had to determine whether there was any mistake apparently from the record on that date. The law said that there was such a mistake on that date having regard to sub-section (5) of section 35 of the Act. If the contention on behalf of the petitioner is accepted, it would mean this, that after April 1, 1952, when looking at the record of a particular assessee, the Income-tax Officer will, on exactly the same facts and circumstances, in some cases, see the mistake apparent from the record and in other cases he will not do so. The Legislature did not intended such an inconsistent result. The operation of the legal fiction in section 35 (5) of the Act operates from April 1, 1952, and from that date whenever the Income-tax Officer looks at the record of assessment of an assessee and finds mistake apparent from the record according to sub-section (5) of section 35, then he has power under sub-section (1) of that section to rectify that mistake. There is no vested right in the petitioner not to have a mistake corrected in his assessment which according to the law is a mistake on the date on which the correction is made and can be made under the law. So that sub-section (5) of section 35 applies to the present case because when the Income-tax Officer was looking at the record of the assessment of the petitioner some time after March 1, 1953, he found a mistake apparent from that record according to the then law applicable. This contention on behalf of the petitioner thus also fails.