Retrospective rectification powers cannot reopen final assessments absent clear legislative language, the High Court ruled.

An amendment enlarging the rectification power in section 35 was held not to retrospectively authorise reopening assessments that had already become final before 1 April 1952. The Court applied the settled presumption against retrospectivity where vested rights and finality of completed assessments are affected, and read the deeming fiction strictly to the language used. It held that the earlier assessment could not be treated as containing a mistake apparent from the record merely because the firm's later assessment showed a different position, and the general deeming date in section 1(2) did not extend the amendment beyond its express terms. The rectification orders were therefore without jurisdiction and were quashed.

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Issues: Whether the amended provision inserted in section 35 by the Income-tax (Amendment) Act, 1953 could be applied to reopen assessments that had already become final before 1 April 1952.

Analysis: The Court applied the settled rule that a statute affecting vested rights is prima facie prospective unless clear words or necessary implication require retrospectivity, and that any retrospective effect must be confined to what the language plainly permits. It held that, before the amendment, a completed assessment could not be reopened on the basis of a later assessment of the firm, because the alleged error was not one apparent from the record of the partner's assessment. The newly inserted sub-section created a legal fiction by deeming such correction to be a rectification of a mistake apparent from the record and also altered the point from which limitation ran, thereby affecting the assessee's vested right in the finality of the earlier assessment. The general deeming date in section 1(2) did not extend the amendment beyond the language of the provision, and the absence of an express reopening clause for such earlier assessments indicated that the Legislature did not intend unlimited retrospectivity.

Conclusion: The amended section did not authorise reopening of assessments finally made before 1 April 1952, and the impugned rectification orders were without jurisdiction.

Final Conclusion: The petitioners succeeded, and the assessment rectifications based on the amendment were quashed.

Ratio Decidendi: An amendment that creates a new deeming fiction and enlarges the power to rectify completed assessments, while affecting the finality of prior assessments and vested rights, is not to be construed as retrospectively authorising reopening unless that intention is clearly expressed or necessarily implied.

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