Rectification of assessment based on agreed provisional income was upheld as a mistake apparent from the record.

Original assessments made under section 23(3), though not provisional in the strict section 23B sense, were expressly subject to the assessees' written understanding that the share income could be revised after completion of the firm's assessment. On that basis, the later completion of the firm's assessment formed part of the record for rectification purposes, and the error revealed could be corrected as a mistake apparent from the record under section 35(1) within limitation. Section 35(5) did not apply because the original assessments were completed before 1 April 1952 and the provision was not retrospective beyond its terms. The Court also declined discretionary writ relief under article 226, noting the assessees had accepted the benefit of their undertaking.

---

---

Issues: (i) Whether the original assessments were provisional in nature and whether the assessees' written agreement permitting revision on completion of the firm's assessment affected the validity of the later rectification; (ii) whether section 35(5) applied to the assessments made on March 31, 1951 and March 31, 1952; (iii) whether the impugned order was validly made under section 35(1) of the Income-tax Act.

Issue (i): Whether the original assessments were provisional in nature and whether the assessees' written agreement permitting revision on completion of the firm's assessment affected the validity of the later rectification.

Analysis: The original orders were made under section 23(3) and not under section 23B, so they were not provisional assessments in the strict sense. However, the assessments were expressly made subject to the assessees' written understanding that the share income shown in the returns could be revised after the firm's assessment was completed. In that situation, the firm's assessment record could properly form part of the record for the partners' assessments, and any mistake disclosed on completion of the firm's assessment could be treated as falling within the scope of rectification.

Conclusion: The agreement and the manner in which the assessments were made supported rectification and did not defeat the authority's action.

Issue (ii): Whether section 35(5) applied to the assessments made on March 31, 1951 and March 31, 1952.

Analysis: Section 35(5) was held not to have retrospective operation beyond its language. Since the original assessments had been completed before April 1, 1952, they did not fall within the ambit of that sub-section.

Conclusion: Section 35(5) did not apply to the impugned assessments.

Issue (iii): Whether the impugned order was validly made under section 35(1) of the Income-tax Act.

Analysis: For section 35(1), there must be a mistake apparent from the record. The record for this purpose may include material which, by agreement and the nature of the original assessment, is made part of the assessee's assessment record. The completion of the firm's assessment revealed that the provisional figure adopted in the partners' returns was incorrect, and that error could therefore be rectified within four years. The petitioners' reliance on the contrary authorities was rejected on the ground that the facts were distinguishable. The Court also noted that the assessees had induced the officer to act on their written undertaking and, having taken that benefit, could not successfully seek discretionary relief under article 226.

Conclusion: The rectification was within jurisdiction under section 35(1) and was valid.

Final Conclusion: The petitions failed both on jurisdiction and on the assessees' conduct, and no discretionary writ relief was warranted.

Ratio Decidendi: Where an assessee expressly accepts that a figure in the return is provisional and agrees that it may be revised after completion of a related assessment, the later discovery of the correct figure may constitute a mistake apparent from the record and be rectified under section 35(1) within limitation.

---