LexTHE INCOME TAX OFFICER. MADRAS versus S. K. HABIBULLAH, MADRAS
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716
SUPREME COURT REPORTS [1962] SUPP.
THE IN'CO!IIE TAX OI<'l<'ICER. MADRAS
v.
S. K. HABIBULLAH, MADRAS
(S. K. DAs, M. HmAYATULT,AH a.nd J.C. SuAH, JJ.)
Income Tax-Aaaeument of firm complered prior to April 1,
1952 -P<ruw lo rtctify partner'.• asaeaamenl-lnrlividual and
firm distinct enliliM -Mi.talce diacovererl in firm"' wiaeuni.nt.-
Parfners if can be ma4' liable -Inoorne Ta.i: Art, 1922 ( 11 of
1922), a. 35, els. I, 5.
M was a partner in two firms registered under the Indian
Income Tax Act.
He submitted returru for assessment of
lnc·>me Tax for the years 1916-47 and 47-·18 with regard to
both the firms
showing losses. The assessment of one of the
firm for the year 1946-47 antl 47·48 was completed on 31. 10.50
and of the other for the year
1947 48 on :lO 6.51
whcrtby
the los>e1
calcul•ted were less tha·1 claimed by M before the
Income Titx Officrr. On receipt of intimation of the orden
passed in the
a~set~rnents of the t No finru the Jnl.01nc Tax
Officor issued on May +, 1953, notice to M to show cause
why the assessment for
the
year 1946-47 and 47 .. 13 should
not be rectified under s. 35 of the Act. M replied that he had
no oh_jectinn if the
ao:sessmcnt was cornplr:t~d according to
law. On 27.3 .. i4 the
Income-tax Offtcer revised the a1scss-
mt-nt in rtsper.t of the t\\'O yearo; after taking into account the
share:: of the lo~ses as
comput<'d
in the assessmrnt of the two
firms. r.r rlieil on
17.4. j4 and his son H
applied to the
Con1n1issi':'.n('r of Income Tax for rt'vi1iutt of the orders. 'fhe
Co1nn1hsinner held that s. 3'.i was properly invoked fer rectifi-
cation of the
as..o;essment.
"fhe }Jigh Co-Jrt of Madras on a
petition 1noved hy 11 ordered that a writ of certiorari to is!ne
quash in!{ the ordtr. 'fhr Conunissio 1cr of Inco1ne·l tX came
up in appc•I.
f/r/d, thats. 35 (1)
of the
Income T•< Acl empower<
the lnc•>n1e Tax Authorities to rectify mi!t:t1'e:; apparent fro1n
the record of crrtain ordcn pa~s~d hy the1n.
But if the la\\'
docs not
authnri!\C the
lnco1ne Tax Officer to rtctify the
assessn1~11t, assent could not validate what \\'as uuauthori..ed
lff/,[, f11rther. that
for the
purpose of assessment an
individua1 and a
firn1
art'
distinct eutitits; and even if an
indh·i<lual is a partner of a firm, a ndstakt> disco\'crcd because
of something- containrd in the assessment of tht:
fi.r111 i~ no.t !1
mistake apparrnt fron1 the
record of assess1ncnt ol the 1nd1v1·
dual partner.
2 s.c.R.
SUPREME COURT REPORTS
717
Held, also, that the Legislature has given to cl. (5) of
s. 35 which was incon:iorated with effect from April I, 1952,
a partial retrospective operation .. The provision.enacted by
cl. (5) is not procedural in charac~er, it affects ve<ted rights of
the assessre. Therefore in the absence of compelling reasons
the court would not be justified in giving a greater retrospec-
tivity to the provision than is warranted by the plain words
used by· the Legislature. Clause (5) of s. 35 docs not purport
to amend cl.
(I) of the same section. It conftrs additional
power of rectification upon the Income Tax Authorities; and
that power cannot be exercised in respect of a<Sessmont of firm
which have been completed before the date on which the
power was invested.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 557 and 558 of 1960.
Appeals from the judgment and order dated
April 10, 1957, of the Madras High Court in W.P.
No. 952 of 1955.
K. N. RajagopalSastri and D. Gupt,a, for the
appellants.
R. Thiagarajan, for the respondent.
1962. January 24. The Judgment of the Court
was delivered by
SHAH, J.-One S. K. Mohideen-hereinafter
referred to as the assessee-was a partner in two
firms-Messrs. Dinshaw and Co. and Messrs. Pala-
niappa Chettiar and Co. The firms were registered
under the Indian Income T3x Act. The assessee
submitted returns of his income and incorporated
therein the estimated share of his losses in the two
firms at Rs .. .20,000/- and Rs. 10,000/-, for the assess-
ment year 1946-47 and at Rs. nil and Rs. 12,436/-
for the assessmel)t year 1947-48. The Income-tax
Officer, V. Circle, Madras completed the assessment
for the two years on February 20, 1950 after adopt-
ing the estimates furnished by the assessee, but he
made a note that the lo11S0s accepted were subject
to revision on ascertainment of correct particulars.
The assessment of Messrs. Dinshaw & Co. for the
years 1946-47 and 1947-48 was coExcerpt shown. Read the full judgment & AI analysis in Lexace.