KUNDAN LAL Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE father of the appellant Kundan Lal was a partner in the firm Kanshi Ram Kundan Lal, having a share of 12/16th in the business of the same. After the death of his father that share in the business of the firm is represented by the appellant.

(2.) THE only question that has been canvassed in this appeal is the same as was the ground in the petition and as was, after argument, negatived by the learned single Judge. It is not denied by the learned Advocate-General appearing on behalf of the said Act, a mistake of the type as is involved in the present case could not have been rectified in the assessment of the appellant under sub-section (1) of section 35 even though on re-assessment it was found that the taxable income of a registered firm was more than it had been originally assessed. THE appellants firm is a registered firm. But the learned Advocate-General has contended that after the enactment of that sub-section the re-assessment of the taxable income of a registered firm enables the income-tax authorities to rectify a mistake in the assessment of a partner as arising in consequence of the re-assessment of the taxable income of such a firm. He contends that there is no case of retrospective operation of the amending Act but that that is the consequence of the newly added sub-section (5) to section 35 of the Indian Income-tax Act, 1922. In support of his position the learned Advocate-General relies upon the same case upon which the learned single Judge has done in his order under appeal. On the side of the appellant the learned counsel takes the position that the assessment of the appellant having been finalised some time in 1946, it cannot be re-opened in consequence of the provisions of the Income-tax (Amendment) Act, 1953, except from and after April 1, 1952, the date to which retrospective effect has been given to that amending Act. He says that the assessment of the appellant was finalised long before that date and rectification of any mistake in it is not within the scope of the amending Act unless that Act is to be given retrospective operation further back than April 1, 1952. In this respect he relies upon Lakshminarayana Chetty v. First Additional Income-tax Officer, in which the learned Judges held that the provisions of sub-section (5) of section 35 of the Indian Income-tax Act, 1922, which were inserted in that Act by the Income-tax (Amendment) Act, 1953, are not merely declaratory of a pre-existing law but clearly affect vested rights which have accrued to the assessees; the sub-section, therefore, must be deemed to have come into force on April 1, 1952, and no retrospective operation can be given to it. This position is unexceptional for the Indian Income-tax (Amendment) Act, 1953, having been given retrospective effect to a definite particular date, it cannot have a greater retrospective effect so as to be operative from a date further back than that date. So far the position is clear. But it appears to me that this case is not helpful to the appellant in the present case because the assessment of the registered firm, by reason of which the share of the profits of the assessee in that case was found to be much more than previously, was completed on July 31, 1951. It was because of that assessment of the registered firm that rectification of the mistake was sought in the assessment of the partner under sub-section (5) of section 35 as added by the amending Act which was operative from April 1, 1952. Obviously to a case like that that sub-section could not possibly apply by any stretch of argument. THE assessment of the registered firm was completed some time before the introduction of sub-section (5) to section 35 by the amending Act and under that sub-section in the mistake in the assessment of the partner could not be rectified as if it was a mistaken under sub-section (1) of section 35 of the Indian Income-tax Act, 1922. So that on facts this authority has no application to the present case.