1957 (12) TMI 36

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....e revised in exercise of his powers under section 35 of the Income-tax Act. The petitioners are admittedly partners in Messrs. Uppala Peda Venkataramanayya and Sons, Oil Mills, Anakapalli, and have each l/4th share therein in the profits and losses. In response to the notice issued under section 22(2) of the Income-tax Act the petitioners submitted their individual returns on August 31, 1951, declaring their income and including therein a provisional sum representing their share of income from the aforesaid firm. As the firm's assessment was not completed by that time, each of the petitioners expressed in writing that they have no objection to adopting correct share income after the firm's assessment is completed and revising the o....

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....tion in these petitions are: (i) whether the original assessment is of a provisional nature and what is the effect of the petitioner's agreement in writing; (ii) do the provisions of section 35(5) apply to the assessments made on March 31, 1951, and March 31, 1952; and (iii) whether the impugned order has been validly made under section 35(1) of the Act. If section 35(5) applied to the case, there will be an end of the matter and the petitions would fail. So then, the first question for consideration is, whether section 35(5) applies to the present case. As observed in Lakshminarayana Chetty v. Additional Income-tax Officer [1956] 29 ITR 419 there is nothing in section 35(5) which would render the amendment more retrospective than its ....

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....he record. The record contemplated is a record of the final assessment of the assessee himself, though the mistake discovered may be the product of any subsequent circumstance. In Commissioner of Income-tax v. Khemchand Ramdas [1938] 6 ITR 414 what was the correct assessment of the registered firm was held to be a mistake in consequence of subsequent cancellation of registration. In that case the order of cancellation of registration was taken to be part of the record and since the firm could no longer be entitled to exemption from super-tax in consequence of this cancellation it was held that the previous assessment was a mistake apparent from the record. Similarly in S.K. Habibullah v. Income-tax Officer [1957] 32 ITR 369 the Madras High ....

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....will not apply to the facts of the present case. Whether there is a mistake apparent from the record is a question of fact. There can be cases where the record of the firm so far as the share of the partner is concerned by agreement is made the record of the partner's assessment. If the assessment is expressly made subject to that agreement, it cannot be said that the firm's assessment record does not form part of the record of the partners within the meaning of section 35(1). Any mistake discovered on the completion of the assessment of the firm will therefore fall within the ambit of section 35(1) of the Act. In this view, the order passed by the Income-tax Officer rectifying the mistake cannot be said to be without jurisdiction a....