Rectification of assessment: amendment's deeming provision cannot retrospectively empower reopening of finalized assessments, court disallowed reopening.

Whether an Income-tax Officer could reopen assessments finally made before 1 April 1952 under the amendment inserting sub section (5) to section 35 was decided by applying presumptions against retrospective legislation and rules of statutory construction. The court treated the subsection as creating a legal fiction that a partner's share ascertained on firm assessment is a mistake apparent from the record, but held that such a fiction cannot be applied to impair vested rights or extend limitation unless the legislative language plainly requires retrospective effect. Outcome: no jurisdiction to reopen pre existing final assessments; impugned orders quashed and petition allowed for the assessee.

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Issues: Whether the Income-tax Officer has jurisdiction under section 35(5) as inserted by the Indian Income-tax (Amendment) Act, 1953, to reopen and rectify assessments finally made before 1st April, 1952.

Analysis: The Court examined section 35 of the Income-tax Act, 1922, as originally enacted permitting rectification of mistakes apparent from the record within a four-year period, and the effect of sub-section (5) inserted by the Indian Income-tax (Amendment) Act, 1953 which deems inclusion or correction of a partner's share, ascertained on assessment or reassessment of the firm, to be a rectification of a mistake apparent from the record and computes the four-year period from the firm's final order. The Court applied established rules of statutory construction concerning retrospective enactments, including the presumption against retroactivity where vested rights are affected, and that an amendment will not be given retrospective effect beyond what the language plainly requires. The Court analysed the Amending Act's section 1(2) (deeming the Act to have come into force on 1 April 1952) and the specific provisions in the Amending Act that expressly limited reopening where Parliament intended it. The Court found that sub-section (5) introduces a legal fiction to treat a discovered discrepancy as a mistake apparent from the record and thereby affects vested rights by permitting reopening beyond the original limitation; such an effect cannot be imputed retrospectively to assessments finally concluded before 1 April 1952 unless the legislative language clearly and necessarily so provides. The Court considered precedent and specific provisions in the Amending Act that expressly governed reopening in certain cases and concluded that the deeming date in section 1(2) cannot be read to grant wider retrospective power than the Act's language plainly indicates.

Conclusion: The Income-tax Officer has no jurisdiction to reopen assessments finally made before 1st April, 1952, under section 35(5) as inserted by the Indian Income-tax (Amendment) Act, 1953; the orders dated 20th March, 1954 and 31st March, 1954 are quashed and the petition is allowed in favour of the assessee.

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