S. 35(5) of the Income-tax Act, 1922, which was enacted in 1953 and deemed the inclusion or correction of a partner's share in the assessment to be a mistake apparent from the record, could not be applied retrospectively to assessments of firms completed before April 1, 1952, as it affected vested rights of the assessee.

Judgment

SHAH, J. : One S. K. Mohideen - hereinafter referred to as the assessee - was a partner in two firms - Messrs. Dinshaw and Co. and Messrs. Palaniappa Chettiar and Co. The firms were registered under the Indian Income-tax 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 assessment year 1946-47 and at Rs. nil and Rs. 12,436/- for the assessment year 1947-48. The Income-tax Officer, V Circle, Madras, completed the assessment for the two years on February 20, 1950 after adopting the estimates furnished by the assessee, but he made a note that the losses 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 completed on October 31, 1950 by the Income-tax Officer, II Circle, Madras and the proportionate share of the assessee for the losses was computed for the two years at Rs. 15,839/- and Rs. 1,046/- respectively. Assessment of Messrs. Palaniappa Chettiar & Co. for 1947-48 was completed by the Income-tax Officer, Special Circle, on June 30, 1951 and the share of the assessee in the loss suffered by that firm was computed at Rs. 2,009/-. On receipt of intimation of the orders passed in the assessment of the two firms the Income-tax Officer, V Circle, Madras, issued on May 4,1953 notices to show cause why the assessments of the assessee, for the years 1946-47 and 1947-48 should not be rectified under S. 35 of the Income-tax Act. On March 24, 1954, the assessee wrote to the Income-tax Officer stating: "This is to inform you that I have no objection in completing the assessments of the previous years in accordance with law." On March 27, 1954, the Income-tax Officer revised the assessment of the assessee in respect of the two years after taking into account the share of the losses as computed in the assessments of the two firms.

2. The assessee died on April 17, 1954 and his son S. K. Habibullah - hereinafter referred to as the respondent - applied to the Commissioner of Income-tax, Madras praying for revision, of the orders. The Commissioner held that S. 35 was properly invoked for rectification of the assessments and rejected the applications. But the High Court of Judicature at Madras in petitions under Art. 226 of the Constitution filed by the respondent ordered that writs of certiorari do issue quashing the orders of the Income-tax Officer, V Circle. The Commissioner of Income-tax, Madras, appeals to this Court with certificate of fitness granted by the High Court.

3. The plea of the Commissioner that the assessee having assented to the rectification, it was not open to the respondent to challenge the authority of the Income-tax Officer, has no force. By his letter dated March 24, 1954 the assessee merely informed the Income-tax Officer that he had no objection to rectification according to law. But if the law did not authorise the Income-tax Officer to rectify the assessment, assent could not validate what was unauthorised.

4. Section 35 (1) empowers the Income-tax authorities to rectify mistake apparent from the record of certain orders passed by them. The clause (omitting parts not material) provides that the Income-tax Officer may at any time within four years from the date of any assessment order passed by him, on his own motion rectify any mistake apparent from the record of the assessment. The power of rectification may be exercised subject to two conditions : (1) that there is a mistake apparent from the record of the assessment, and (2) that the order of rectification is made within four years from the date of the assessment sought to be rectified. The mistake which may be rectified need not be in the order itself : it may be in any part of the record or proceeding of assessment of the assessee. But for the purpose of assessment an individual and a firm are distinct entities and even if an individual is