TaxTMI 
TaxTMI 
1955 (12) TMI 35
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..... By reason of that assessment the share of the profits of the assessees' family for 1947-48 was found to be Rs. 21,659 instead of Rs. 6,000 which was the sum included in the assessment of the joint family by the assessment order dated 18th March, 1948. On 15th February, 1954, the Incometax Officer gave the assessees notice to state their objections why the previous assessment dated 18th March, 1948, should not be rectified under section 35 of the Income-tax Act (hereinafter referred to as the Act) as amended by the Income-tax (Amendment) Act, 1953 (hereinafter referred to as the Amending Act). The assessees objected to the rectification on the ground, among others, that the said Act was not retrospective and would not affect the assessment completed prior to 1st April, 1952. The Income-tax Officer rejected the objections and called upon the assessees to pay the additional tax before 10th May, 1954. Learned counsel for the assessees contends that the Amending Act of 1953 is not retrospective and therefore it cannot be invoked to reopen an assessment completed before 1st April, 1952, whereas the learned Advocate-General argues that the amendment is only declaratory of the pre....
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....n 35, as it originally stood, the Commissioner, the Appellate Assistant Commissioner or the Income-tax Officer may within four years from the date of the order of assessment or other orders mentioned in the section made by them rectify any mistake apparent from the record. But under the amendment inserted by Act XXV of 1953, if on assessment or reassessment of a firm any reduction or enhancement is made in the income of the firm and it is found that the share of the partner in the profit or loss of the firm has not been included in the assessment of the partner or though included it was not correct, the assessment can be reopened and corrected on the basis of the assessment of the firm within four years from the date of the final order passed in the case of the firm. The section further says that the inclusion of the share of the partner in the assessment or the correction thereof shall be deemed to be a rectification of a mistake apparent from the record within the meaning of the section. To put it differently, section 19 of the Amending Act introduces a fiction to enable the Income-tax authorities to invoke the provisions of section 35 for amending the completed assessment for in....
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.... be construed to have a greater retrospective operation than its language renders necessary. " In Halsbury's Laws of England, Vol. 27, page 159, it is stated : " A statute is prima facie prospective, and does not interfere with existing rights, unless it contains clear words to that effect, or unless having regard to its object it necessarily does so. " Further, " A statute is not to be construed to have a greater retrospective operation than its language renders necessary. " Bowen, L. J., in Reid v. Reid (1886) 31 Ch. D. 402) states the scope of the rules of construction in clear terms at page 408 as follows : " Now the particular rule of construction which has been referred to, but which is valuable only when the words of an Act of Parliament are not plain, is embodied in the well-known trite maxim omnis nova constitutio futuris formam imponere debit non praeteritis, that is, that except in special cases the new law ought to be construed so as to interfere as little as possible with vested rights. It seems to me that even in construing an Act which is to a certain exte....
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....y that there was a mistake apparent from the record for the assessing authority accepted a certain figure as representing the share of the assessees in the firm and made a final assessment. The mistake is not in the record but by a subsequent assessment of the firm, it was discovered that the earlier assessment was wrong to the extent of the assessees' share in the firm. It is not a mistake apparent from the record but a mistake discovered from the disposal of another case. It is, therefore, manifest that before the amendment came into force, the assessment on the assessees had become final and it could not have been rectified on the ground of a mistake apparent from the record, and therefore the assessees have acquired a vested right against any interference with the finality of the assessment made on them. The Income-tax authorities, therefore, had to rely only on the Amending Act, which must be deemed to have come into force on 1st April, 1952, for amending the assessment. Sub-section (5) inserted by the new Act clearly indicates that Parliament did not consider that the inclusion of the correct figure on the basis of the final assessment of the firm was an error apparent fr....
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....ening of the assessment where it intended to do so. Under section 3(2) the amendments made by sub-clause (iii) of clause (b) of sub-section (1) shall be deemed to be operative in relation to all assessments for any year whether such assessments have or have not been completed before the commencement of the Indian Income-tax (Amendment) Act, 1953. Section 7(2) prescribes that the amendments made by clause (a) of sub-section (1) shall be deemed to be operative for any assessment for the year ending on the 31st day of March, 1952, whether made before or after the commencement of this Act and where any such assessment has been made before such commencement the Income-tax Officer concerned shall revise it whereever necessary to give effect to this amendment. Under section 30(2) the amendments made by sub-section (1) shall be deemed to be operative in relation to any assessment subsequent to the assessment for the year ending on the 31st day of March, 1951, whether such assessment has or has not been made before the commencement of this Act and where any such assessment has been made before such commencement it shall be lawful for the Income-tax Officer to revise it, wherever necessary t....
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....) and in which 8 years had not elapsed on the date of the issue of notice. Chakravartti, C. J., observed at page 481 : " The question is not one of retrospective operation at all but a question of what the section says and how far the section, having come into force on the 30th March, 1948, extends by its own words . . . . . . The plain effect of the substitution of the new section 34 with effect from the 30th March, 1948, is that from that date the Income-tax Act is to be read as including the new section as a part thereof and if it is to be so read, the further effect of the express language of the section is that so far as cases coming within clause (a) of sub-section (1) are concerned, all assessment years ending within 8 years from 30th March, 1948, and from subsequent dates, are within its purview and it will apply to them, provided the notice contemplated is given within such eight years. " We regret our inability to accept the reasoning of the learned Chief Justice. Section 1(2) of Act XLVIII of 1948 gave a limited retrospective operation to the Act. Though the Act itself came into force on 8th S....