S. SANKAPPA AMD OTHERS versus THE INCOME-TAX OFFICER, CENTRAL CIRCLE II, BANGALORE

Citation: [1968] 2 S.C.R. 674 · Decided: 14-12-1967 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

674 
S. SANKAPPA AND OTHERS 
I 
v. 
THE 
INCOME-TAX OFFICER, 
CENTRAL CIRCLE 
II. 
"BANGALORE 
December 14, 1967 
[J.C. SHAH, V. R.AMASWAMI AND V. BHARGAVA, JJ.] 
lncbnte 1'ax Act, 1922, ss. 23, 35-lnco;ne Tax Act . . 1961. s.t. 
155 
297€-2) ('a)-Whetlzer proceedings on issue of notice under s. 35(5) o.' 
the Act of 1922 for rectification are proceedings for asse;.·sn1en1 · v.•itlti:; 
the meaning .of s. 297(2) (a) of the· Act of 1961. 
. 
' 
During the assessment years 1958-59, 1959-60 :md 
1~60-ol. t\1'•' 
fums ir( which the six appellants were partners, filed returns declaring 
themse1vcs to be registe1~<l firn1s and also presented applic~ilions for rcgis· 
tration of the firms under s. 26A of the Income-tax Act, 1922. The lncome-
!ax. Officer refused re.i::istration of the firms an<l assessed the income of 
the firms, trearJng them as unregistered. 'fhe assessments of the six ap-
pellant') were-·nlso made, so that their incomes from the t\\-'o firn1s \Vere 
ir,cludcd in. their individual assessments as if they had received the income 
J11 the caPacitfQf partners in url.rcgistcred firms. 
Appeals n1ade by the 
!irn1s against the order refusing registration \Vere allowed by the Appellate 
Assist.ant Comn1issioner nnd, in pursuance of the appcilatc ordcr.s. the 
Inconie Tax Officer passed a co~olidated order on 20lh Dccemhcr .. 1966. 
revising the assessments of the firms for all these years on the basis that. 
they were reg:stered firms and also apportioned the income of the. firms 
bct\vccn the six partners. 
Subsequently, the Income Tax Officer issued 
notices under s. 155 of the Income Tax ACt, 1961, proposing to rectify 
the individual assessments cf the six 
appelian.ts in 
r~!)Cct 0f each of 
the three assessment y·~ars, whereupon the, appellants challc;igcd the validity 
of the notices by \Vrit pctitio.ns. 
It \Vas conceded before· the High Court 
on behalf Pf th-e Incon1e Tax Officc!r that a'~ the rectification proposed r::.iatcd 
to assessment years \Vhen the Income Tax Act, 192:!. was 
<!ppticablc. 
proceedings for rectificalion Could not be taken under s. 155 of thl! 196 I 
.l\ct but only under s.' 35(5) ·of the 1922 Act. in view of the proviSions of 
s. 297(2)(a) of th~ A~t of 
1961,. 
The High Court 
dismissod · the 
petitions: 
In nppcal to this Court it was 
contended, inter alia, that 
prOCl!cd-
ings for rectificai:ion under s. 35(5) of the Act of 1922 cannot he held 
to be .Proceedings for assessment within the meaning of thut i::xprcssiOn 
used in s. 297(2) (a) Of the Act of 1961, and therefore un.d~r that pr<.>· 
vision of Jaw, the Act of 1922 could not be reson:ed ll'.l by the Jncome-wx 
Officer in order to rectify the 'assCssments of the appellant~ that.· in an:: 
case, the provisions of s. 35(5) of the Act of 1922 are not 3'tractc<l. 
because proceedings under that section. can only be taken when it is 
'found on the assessment or rea~sesrn'cnt of a firm that the share of the 
partner in the profit or loss of the firm has ·not beea included in the 
nssessment of the p"artner or, if included', is no! correct; and. ln the pre· 
~cnt cases, ther~ was no assessment or' creasscssment of the firms when 
the Income-tax Officer. in pursuance of ithe appellate order, proce~ded to 
pass orders rectifying the assessments of lhe firms under s. 35 (I) of the 
A.ct of 1922; as there was no fresh computation of income the proceediag.s 
~ought to be taken wcre·not proceedings for aS'sessment. 
HELD : Dismissing the appeal : 
A 
s 
D 
F 
G 
H 
B 
c 
D 
E 
F 
SANKAl'PA I'. I.T.0, (Bhargava, J.) 
675 
( 1) the wor<l "assessment" is used in the. Income-tax Act in. a number 
of provisions in a comprehensive sense and includes all proceedings, start-
ing with the filing of the 
return or issue of notice 
and ending ~th 
determination of the tax payable by the assessee. When proceed!Dgs 
are taken for rectification of aiSOSSment to tax either under s, 35(1) or 
s. 35(5) of the Act of 1922, they must be held to be proceedings for 
aSiessment. 
In proceeding under those provisions, what .the 
Income-tax 
Officer does is to correct errors in. or rectify orders of assessment made 
by him, and orders making such correction or rectifications are, therefore 
clearly part of the proceeding.< for assessment. [678 B, G-H] 
The orders passed under s. 35(1) by the Income·C.ax Officer on '.'.0th 
De~mber, 1966 were all orders altering assessment orders made in the 
proceedings for assessment of the firms, while under the impugn

Excerpt shown. Read the full judgment & AI analysis in Lexace.