{"id":40084,"date":"1967-10-25T00:00:00","date_gmt":"1967-10-24T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/income-tax-officer-tuticorin-vs-t-s-devinath-nadar-ors-on-25-october-1967"},"modified":"2017-03-10T21:09:43","modified_gmt":"2017-03-10T15:39:43","slug":"income-tax-officer-tuticorin-vs-t-s-devinath-nadar-ors-on-25-october-1967","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/income-tax-officer-tuticorin-vs-t-s-devinath-nadar-ors-on-25-october-1967","title":{"rendered":"Income-Tax Officer, Tuticorin vs T. S. Devinath Nadar & Ors on 25 October, 1967"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Income-Tax Officer, Tuticorin vs T. S. Devinath Nadar & Ors on 25 October, 1967<\/div>\n
Equivalent citations: 1968 AIR 623, \t\t 1968 SCR (2)\t 33<\/div>\n
Author: G Mitter<\/div>\n
Bench: Wanchoo, K.N. (Cj), Bachawat, R.S., Ramaswami, V., Mitter, G.K., Hegde, K.S.<\/div>\n
           PETITIONER:\nINCOME-TAX OFFICER, TUTICORIN\n\n\tVs.\n\nRESPONDENT:\nT.   S. DEVINATH NADAR & ORS.\n\nDATE OF JUDGMENT:\n25\/10\/1967\n\nBENCH:\nMITTER, G.K.\nBENCH:\nMITTER, G.K.\nWANCHOO, K.N. (CJ)\nBACHAWAT, R.S.\nRAMASWAMI, V.\nHEGDE, K.S.\n\nCITATION:\n 1968 AIR  623\t\t  1968 SCR  (2)\t 33\n CITATOR INFO :\n R\t    1973 SC2585\t (13)\n RF\t    1981 SC 271\t (39)\n\n\nACT:\n   Indian Income-Tax Act, 1922 as amended by Act 25 of 1953,\ns. 35(5) -Rectification of partners assessment consequent on\nreassessment  of firm Section permitting such  rectification\nin  respect  of \"completed  assesment\"\tof  partners-Section\nwhether\t applies to partner's assessments  finalised  before\n1st April 1952.\n\n\n\nHEADNOTE:\nThe respondent and his four brothers were partners in a firm\ncarrying on business in gunnies.  The assessment of the firm\nfor  the year 1943-44 was completed on January 22, 1946\t and\nthe  share income of each partner was also determined.\t The\nassessment  of the respondent as an individual on the  basis\nof  his\t share so determined was completed  on\tJanuary\t 24,\n1946.  Subsequently the assessment of the firm was  reopened\nby  notice  under s. 34 of the Indian Income-tax  Act,\t1922\nissued on September 11., 1952 and re-assessment by including\nsome  additional income was made in May 1959.  In July\t1959\nnotice\tunder  s.  35(5) was served on\tthe  respondent\t for\nconsequential rectification of his assessment as an  indivi-\ndual.\tThe rectification was ultimately ordered to be\tmade\nin August 1959.\t The respondent filed a writ petition in the\nHigh Court for quashing the order.  Relying on the  decision\nof  this Court in Second Addl. Income-tax Officer v.  Atmala\nNagaraj\t the  High Court<\/a> quashed the  impugned\torder.\t The\nRevenue appealed to this Court.\t The question that fell\t for\nconsideration  was whether s. 35(5) which was introduced  by\nthe Income-tax Amendment Act, 1953 could be used to  rectify\nassessments made before 1st April 1952, the date from  which\nthe  said amendment came into force.  The  respondent  urged\nthat  since the amendment had 'been brought into force\tfrom\nan  anterior date no greater retrospectivity could be  given\nto it.\nHELD  : (Per Wanchoo C.J., Bachawat, Ramaswami\tand  Mitter,\nJJ)  The aim of the legislation was to bring into  line\t the\nassessment of the individual partner with that of the  firm.\nIt  does not stand to reason that if the assessment  of\t the\nfirm  is  completed  long after that of\t the  individual  by\nrevision  of  proceedings  under  s.  34  or  otherwise\t the\ndiscrepancy  in the income of the partner -as shown  by\t the\nassessment of the firm and as an individual should  continue\nor  be\tleft untouched, and the Obvious and  logical  course\nshould be to rectify the assessment of the individual on the\nbasis of the final assessment of the firm. [39B]\nOn  a  plain  reading  of  s.  35(5)  it  appears  that\t the\nlegislature  intended  that  the  finding  as  to  the\tnon-\ninclusion  of the proper share of the partner in the  profit\nor loss of the firm in the assessment of the partner  should\nexcite\tthe  power  of rectification.  The power  is  to  be\nexercised  whenever\"it\tis found on the\t assessment  or\t re-\nassessment  of the firm or on any reduction  or\t enhancement\nmade  in  the  income of the firm.\" The\t subject  matter  of\nrectification  is the completed assessment of a\t partner  in\nthe firm.  This is brought out by the. use of the words when\nin  respect  of any completed assessment of a partner  in  a\nfirm.\"\tThere  is nothing in the section to show  that\tsuch\n\"completed  assessment\" must Like place after s.  35(5)\t was\nbrought\t on the statute book.  What must take place to\tgive\nrise  to  the power of rectification is the finding  on\t the\nassessment or\n34\nre-assessment  of the firm.  The finding alone must be\tmade\nafter  the  section came into force.  The finding is  to  be\ngiven  effect  to  or  made  operative\ton  the\t  'completed\nassessment  of\ta  partner.  As the mischief  sought  to  be\nrectified  was\tthe discrepancy between the  income  of\t the\npartner assessed as an individual and his income as computed\non the assessment of the firm, the legislature must be\theld\nto have made the remedy applicable whenever the mischief was\ndiscovered.  There would have been nothing unjust in  making\nthe power of rectification exercisable at any time after the\ndiscovery  of  the discrepancy but the\tlegislature  in\t its\nwisdom\tdid not think that the power should be\tused  except\nwithin\ta limited period of four years from the date of\t the\nfinal order in the case of the firm. [39D-H]\nSecond Addl. lncome-tax Officer v. Atmala Nagaraj<\/a> 46  I.T.R.\n609, reversed.\nKanuinarlapudi\tLakshminarayana Chetty v.  First  Additional\nIncome-tax  Officer,  Nellore,<\/a>\t29  I.T.R.  419,  lncome-tax\nOfficer, Madras v. S. K. Habibullah, Madras,<\/a> [1962] Supp.  2\nS.C.R.\t716, Pardo v. Bingham, L.R. 4 Chancery\tAppeals\t 735\nand Ahmedabad Manufacturing and Calico Printing Co. Ltd.  v.\nS. C. Mehta, [1963] Supp. 2 S.C.R. 92, referred to.\nPer   Hegde,  J\t (dissenting).\t The  assessments   of\t the\nrespondents had become final in the year 1946 and under\t the\nlaw  as it stood prior to the ,enactment of s.\t35(5)  those\nassessments  could not have been interfered  with.   Section\n35(5)  neither\texpressly nor by necessary  implication\t em-\npowers\tthe Income-tax Officer to reopen  assessments  which\nhad become final.  If the section empowers the reopening  of\nall final assessments of the partners of firm, there was  no\nneed to give that provision a partial retrospectivity. [51H;\n52A]\nThe  legislature used the expression \"completed\t assessment\"\nin  s.\t35(5) to distinguish that class of  assessment\tfrom\nassessments  which are made final under the Act.   By  using\nthat expression the legislature intended that the assessment\nof a partner should not be considered as a final  assessment\ntill  the  assessment of the firm becomes final.   In  other\nwords\tthe  partners'\tassessment  would  continue  to\t  be\ntentative till the firm's assessment 'becomes final, If that\nbe  the\t true interpretation of the expression\t\"  completed\nassessment\"  then the expression can only apply\t to  assess-\nments  of  partners  made on or after April  1,\t 1952.\t The\nrespondents'   assessments  could  not\tbe   considered\t  as\n\"completed  assessments\" within the meaning of that word  in\ns. 35(5). [52F-H]\nThe  decision  of  this Court in  Atamla  Nagarajs  case  is\ncorrect.   Even\t assuming  that\t s.  35(5)  can\t receive   a\ndifferent  interpretation, this Cot= would not be  justified\nin overruling its previous decision except under  compelling\ncircumstances; otherwise confidence of the public in the  of\nthis Court is bound to be shaken. [53C-E]\nBengaL Immunity Co. Ltd. v. State of Bihar & Ors.,<\/a> [1955]  2\nS.C.R. 603, relied on.\nCase Law referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos.  2154  to
\n2158 of 1966.\n<\/p>\n
Appeals\t by special leave from the judgment and order  dated
\nMarch  27, 1963 of the Madras High Court in  Writ  Petitions
\nNos. 1229 to 1233 of 1961.\n<\/p>\n
S.   K. Aiyar and R. N. Sachthey, for the appellant (in\t all
\nthe ,appeals) –\n<\/p>\n
T.  A.\tRamachandran,  for  the\t respondents  (in  all\t the
\nappeals),
\n35<\/span>
\nThe  Judgment  of  WANCHOO, C.J.,  BACHAWAT,  RAMASWAMI\t and
\nMITTER, JJ. was delivered by MITTER, J. HEGDE, J.  delivered
\na dissenting Opinion.\n<\/p>\n
Mitter,\t J.  This  group of five appeals  by  special  leave
\narises\tout  of a common order made under Art.\t226  of\t the
\nConstitution of the High Court of Judicature at Madras.\t The
\nappeals\t involve  the  interpretation of s. 35\t(5)  of\t the
\nIncome-tax, Act, 1922.\n<\/p>\n
The facts in Civil Appeal No. 2154 of 1966 relevant for\t the
\ndisposal  of  the  appeal, taken by way of  sample,  are  as
\nfollows.  The respondent along with his four brothers\twere
\npartners  of  a\t registered firm  carrying  on\tbusiness  in
\ngunnies.   The assessment of the firm for the  year  1943-44
\nwas  completed on January 22, 1946 and the share  income  of
\neach partner was determined at Rs. 8,265\/-.  The  assessment
\nof the respondent as individual was completed on January 24,
\n1946  wherein was included his income from  the\t partnership
\njust  noted.  Subsequently, the assessment of the  firm\t was
\nre-opened by proceedings under s. 34(1) (a,) of the Act\t and
\na  sum of Rs. 90,000\/- was added to the income of  the\tfirm
\nliable\tto  be brought to tax.\tThe notice under s.  34\t was
\nissued\ton  September 11, 1952 and the reassessment  of\t the
\nfirm  took place on May 30, 1959.  On July 24,\t1959  notice
\nunder  s. 35(5) of the Act was served on the respondent\t for
\nrectification  of  his\tassessment as  an  individual.\t The
\nrectification  was ultimately ordered to be made  on  August
\n31,  1959.   The respondent applied to the  High  Court\t for
\nquashing the said order.\n<\/p>\n
When  the  matter  came to be heard by\tthe  High  Court  of
\nMadras, there were already three reported-decisions of\tthis
\nCourt bearing on the interpretation of s. 35(5) of the\tAct.
\nIn the last of these, decisions, a doubt had been cast as to
\nthe  correctness-of the two earlier decisions but  the\tHigh
\nCourt  felt  that the decision in Second  Addl.\t  Income-tax
\nOfficer\t v. Atmala Nagaraj<\/a>(1) being the second\tdecision  of
\nthis  Court  in point of time, was fully  aplicable  to\t the
\ncases before it and in that view of the matter the order  of
\nrectification was quashed.  Hence these appeals.
\nBefore\ttaking note of the earlier decisions of this  Court,
\nit would be appropriate to consider the relevant  provisions
\nof  the Income-tax Act and interpret them as if\t the  matter
\nwere  res  Integra.  If the result leads to  a\tconflict  of
\ndecisions,  we\twill  have to examine  the  question  as  to
\nwhether the view taken in an earlier case should be  adhered
\nto.   It  is  only when this Court finds  itself  unable  to
\naccept\tthe  earlier  view that it  would  be  justified  in
\ndeciding these appeals in a different way.
\n(1) 46 I.T.R. 609
\n36<\/span>
\nThe two sub-sections of S. 35 which call for  interpretation
\nare transcribed is follows :\n<\/p>\n
\t      “35.    Rectification  of\t  mistake.-(1)\t The
\n\t      Commissioner     or    Appellate\t   Assistant
\n\t      Commissioner  may,  at any  time\twithin\tfour
\n\t      years from the date of any order passed by him
\n\t      in appeal or, in the case of the Commissioner,
\n\t      in revision under section 33A and the  Income-<\/p><\/blockquote>\n
\t      tax Officer may, at any time within four years
\n\t      from  the\t date  of any  assessment  order  or
\n\t      refund  order passed by him on his own  motion
\n\t      rectify  any mistake apparent from the  record
\n\t      of the appeal, revision, assessment or  refund
\n\t\t\t    as\tthe case may be, and shall within
\nthe  like
\n\t      period rectify any such mistake which has been
\n\t      brought to his notice by an assessee :\n<\/p>\n
\t      Provided\tthat no such rectification shall  be
\n\t      made,  having  the  effect  of  enhancing\t  an
\n\t      assessment  or  reducing a refund\t unless\t the
\n\t      Commissioner,    the    Appellate\t   Assistant
\n\t      Commissioner or the Income-tax Officer, as the
\n\t      case may be, has given notice to the  assessee
\n\t      of his intention so to do and has allowed\t him
\n\t      a reasonable opportunity of being heard :
\n\t      Provided\tfurther that no\t such  rectification
\n\t      shall  be\t made of any mistake  in  any  order
\n\t      passed   more   than  one\t year\tbefore\t the
\n\t      commencement   of\t  the\tIndian\t  Income-tax
\n\t      (Amendment) Act, 1939.\n<\/p>\n
\t      (2) to (4)……………\n<\/p>\n
\t      (5)   Where  in  respect\tof   any   completed
\n\t      assessment of a partner in a firm it is  found
\n\t      on the assessment or reassessment of the\tfirm
\n\t      or on any reduction or enhancement made in the
\n\t      income  of the firm under section 31,  section
\n\t      33,  section 33A, section 33B, section  66  or
\n\t      section  66A that the share of the partner  in
\n\t      the  profit or loss of the firm has  not\tbeen
\n\t      included in the assessment of the partner\t or,
\n\t      if included, is not correct, the inclusion  of
\n\t      the share in the assessment or the  correction
\n\t      thereof,\tas the case may be, shall be  deemed
\n\t      to  be a rectification of a  mistake  apparent
\n\t      from  the\t record within the meaning  of\tthis
\n\t      section, and the provisions of subsection\t (1)
\n\t      shall apply thereto accordingly, the period of
\n\t      four  years  referred to in  that\t sub-section
\n\t      being  computed  from the date  of  the  final
\n\t      order passed in the case of the firm.\n<\/p>\n
\t      (6) to (10)……………..\n<\/p>\n
\t      Section 35 (5) was brought on the statute book
\n\t      by  the Income-tax (Amendment) Act, 1953\t(XXV
\n\t      of  1953).  Section 1(2) of the  Act  provided
\n\t      that
\n\t      37<\/span>
\n\t      “Subject to any special provision made in this
\n\t      behalf in this Act, it shall be deemed to have
\n\t      come  into  force\t on the 1st  day  of  April,
\n\t      1952.”\n<\/p>\n
The Amendment Act contained provisions which show that\tsome
\nof the amendments introduced were to be effective from dates
\nother  than 1st April, 1952.  Section 19 of the Act of\t1953
\nintroduced  sub-sections  (5), (6) and (7) of s. 35  of\t the
\noriginal  Act.\t Under sub-s. (1) of s.\t 35  the  Income-tax
\nauthorities  mentioned\ttherein were  empowered\t to  rectify
\nmistakes apparent from the record.  Such power could, in the
\ncase  of  an Income-tax Officer, be exercised  at  any\ttime
\nwithin\tfour  years from the date of  any  assessment  order
\npassed\tby  him\t on his own  motion.   The  section  however
\nimposes a limitation in that the mistake must be in the\t re-
\ncord  of  the case itself.  As a firm  and  the\t individuals
\ncomposing  it  are  separate entities  for  the\t purpose  of
\nIncome-tax  Act,  they are assessed  separately.   Under  s.
\n23(5)(a)  of the Act when the assessee is a registered\tfirm
\nand  its income has been assessed under sub-s.\t(1),  sub-s.
\n(3) or sub-s. (4) of that section the income-tax payable  by
\nthe firm itself has to be determined and the total income of
\neach partner of the firm including therein his share of\t the
\nfirm’s\tincome, profits and gains of the previous year\thave
\nto  be assessed and the sum payable by him on the  basis  of
\nsuch assessment has to be determined.  In as much however as
\na mistake discovered in the assessment of the firm was not a
\nmistake\t apparent  from\t the record  of\t assessment  of\t the
\nindividual partner-, s. 35(1) did not enable the  Income-tax
\nOfficer to rectify the assessment of the individual  partner
\nbecause\t of the discovery of the. mistake in the  assessment
\nof the firm.  The judgment of the Andhra Pradesh High  Court
\nin Kanumaral pudi Lakshminarayana Chetty v. First Additional
\nIncome-tax  Officer, Nellore<\/a>(1) wherein it was decided\tthat
\nwhen  the mistake discovered in the assessment of  the\tfirm
\nwas not in the record of the individual partner s. 35(1) did
\nnot authorise the rectification of such mistakes was  upheld
\nby,  this Court in The Income-tax Officer, Madras v. S.\t  K.
\nHabibullah   Madras<\/a>(2).\t   Section   35(5)   removes\tthat
\ndifficulty.   It expression provides that where it is  found
\non  the\t assessment or reassessment, of the firm or  on\t any
\nreduction  or  enhancement made in the income  of  the\tfirm
\nunder  the  provisions of the specified\t sections  that\t the
\nshare  of the partner in the profit or loss of the firm\t has
\nnot  been included in the assessment of the partner  or,  if
\nincluded, is not correct, the inclusion of the share in\t the
\nassessment or the correction thereof will be deemed to be  a
\nrectification  of a mistake apparent from the record  within
\nthe  meaning  of  s. 35 so as to make sub-s. (1)  of  s.  35
\napplicable  to\tthe  case of a\tcompleted  assessment  of  a
\npartner in a firm.  Whereas under s. 35(1) rectification  is
\nonly  possible\twithin\tfour  years from  the  date  of\t any
\nassessment
\n(1) 29 I.T.R. 419.\n<\/p>\n
(2) [1962] Supp. 2 S,C.R, 716.\n<\/p>\n
38<\/span><\/p>\n
order or refund order passed by the Income-tax Officer,\t the
\nstarting  point of computation of the period of\t four  years
\nunder S. 35(5) is the date of the final order passed in\t the
\ncase Of the firm.\n<\/p>\n
The point which has been canvassed in this case in favour of
\nthe  respondent\t is that as the section was brought  on\t the
\nstatute\t book on the 1st April 1952 any mistake anterior  to
\nthat  date  cannot  be rectified.  It was  argued  that\t the
\nopening words of the section reading
\n\t      “Where in respect of any completed  assessment
\n\t      of a partner in a firm”\n<\/p>\n
go to show that\t    only assessments completed\t       after
\nthe introduction of the\t provision  i.e. on 1st\t April\t1952
\nwere  in  the  contemplation of the  legislature  as  proper
\nsubject\t for rectification.  It was urged that according  to
\nthe  well  known canons of  construction  legislation  which
\nimpairs\t an existing right or obligation except\t is  regards
\nmatters of procedure, is not to have retrospective operation
\nunless such construction is clear from the terms of the\t Act
\nitself.\t  This\targument  was sought to be  fortified  by  a
\nreference  to sub-s. (2) of S.1 of the Income-tax  Amendment
\nAct of 1953 on the -round that the legislature was  bringing
\nthis provision on the statute book as from an anterior\tdate
\nand consequently no greater retrospectivity should be  given
\nto  it.\t “The general rule” as Halsbury puts it in Vol.\t 36,
\n(third edition), page 423 :\n<\/p>\n
\t      ”\t .  .  .  .. . . . . . . .  .  is  that\t all
\n\t      statutes,\t other than those which\t are  merely
\n\t      declaratory,  or which relate only to  matters
\n\t      of  procedure or of evidence, are prima  facie
\n\t      prospective;  and retrospective effect is\t not
\n\t      to  be given to them unless, by express  words
\n\t      or necessary implication, it appears that this
\n\t      was the intention of the legislature.”\n<\/p><\/blockquote>\n
The  law was also succinctly stated by Lord Hatherley,\tL.C.
\nin Pardo v. Bingham(1) where on the question as to whether a
\nstatute operated retrospectively it was said
\n\t      “In  fact, we must look to the  general  scope
\n\t      and purview of the statute, and at the  remedy
\n\t      sought  to be applied, and consider  what\t was
\n\t      the  former state of the law, and what it\t was
\n\t      that the Legislature contemplated.”\n<\/p>\n
Applying  the above principles, we find that the aim of\t the
\nlegislation  was  to bring into line the assessment  of\t the
\nindividual partner with that of the firm.  It was well known
\nthat in many cases a firm’s final assessment dragged on\t for
\nyears while the assessments of the individuals composing- of
\nit were completed
\n(1)  L.R. 4 Chancery Appeals 735.\n<\/p>\n
39<\/span><\/p>\n
long before the assessment of the firm itself because in the
\ncase  of individuals the matter was fairly simple.  It\tdoes
\nnot  stand to reason that if the assessment of the  firm  is
\ncompleted  long\t after that of the individual by  reason  of
\nproceedings under s. 34 or otherwise, the discrepancy in the
\nincome of the partner as shown by the assessment of the firm
\nand  as an individual should continue or be  left  untouched
\nand the obvious and logical course should be to rectify\t the
\nassessment  of\tthe  individual on the basis  of  the  final
\nassessment of the firm.\t Sub-s. (5) of s. 35 is only a\tstep
\nin that direction but the legislature in its wisdom  thought
\nit  best  that assessments of individuals  which  had  taken
\nplace  before the final order in the assessment of the\tfirm
\nshould not be, disturbed except within four years therefrom.
\nUnder the Income-tax Act, 1922 a final assessment could\t not
\nbe  altered except under proceedings sanctioned by s. 34  or
\ns.  35\tof  the\t Act  within  the  limits  of  time  thereby
\nprescribed.   Leaving aside for a moment the point  of\ttime
\nwhen  sub-s.  (5)  came into the statute book,\ton  a  plain
\nreading of the provision it appears to us that the  legisla-
\nture  intended that the finding as to the  non-inclusion  of
\nthe proper share of the partner in the profit or loss of the
\nfirm  in  the assessment of the partner\t should\t excite\t the
\npower  of  rectification.   The power  is  to  be  exercised
\nwhenever “it is found on the assessment or re-assessment  of
\nthe  firm  or on any reduction or enhancement  made  in\t the
\nincome of the firm”.  The subject matter of rectification is
\nthe  completed assessment of- a partner in a firm.  This  is
\nbrought out by the use of The words “where in respect of any
\ncompleted  assessment  of a partner in a  firm”.   There  is
\nnothing\t in  the  section  to  show  that  such\t  “completed
\nassessment”  must  take place after the\t provision  i.e.  s.
\n35(5)  was  brought on the statute book.  What\tis  to\ttake
\nplace  to  give rise to the power of  rectification  is\t the
\nfinding on the assessment or re-assessment of the firm\tetc.
\nThe  finding  alone must be made after\tsection\t comes\tinto
\nforce.\t The finding is to be given effect to or  made\tmore
\noperative  on the “completed assessment” of a  partner.\t  As
\nthe  mischief  sought to be rectified  was  the\t discrepancy
\nbetween the income of the partner assessed as an  individual
\nand  his income as Computed on the assessment of  the  firm,
\nthe  legislature  must\tbe held to  have  made\tthe  remedy,
\napplicable  whenever  the mischief  was\t discovered.   There
\nwould  have  been  nothing unjust in  making  the  power  of
\nrectification exercisable at any time after the discovery of
\nthe  discrepancy but the legislature in its wisdom  did\t not
\nthink that the power should be used except within a  limited
\nperiod of four years from the date of the final order.
\nThis  group of appeals has been referred to a  larger  Bench
\nthan  one  of the three Judges before whom  the\t matter\t was
\nopened\ton May 4, 1967 because of the earlier  decisions  of
\nthis  Court:  We  now proceed  to  examine  these  decisions
\nchronologically.  In The
\n40<\/span>
\nIncome-tax Officer, Madras v. S. K. Habibullah<\/a>(1) the  facts
\nwere  as  follows.  One Mohiuddin who was a partner  in\t two
\nregistered   firms   submitted\t returns   of\this   income
\nincorporating  therein the estimated share of losses in\t the
\ntwo firms for the assessment years 1946-47 and 1947-48.\t The
\nestimates  of the assessee were accepted by  the  Income-tax
\nOfficer\t who completed the assessment for ,the two years  on
\nFebruary  20, 1950.  The assessment of one of the firms\t for
\nthe  same  years was completed on October 31, 1950  but\t the
\nproportionate  share  of  the assessee for  the\t losses\t was
\ncomputed  at  much smaller figures.  The assessment  of\t the
\nother firm for 1947-48 was completed on June 30, 1.951 again
\nfor a smaller sum than that estimated by the assessee.\t The
\nIncome-tax Officer started rectification proceedings on\t May
\n4, 1953 and ultimately passed an order for rectification  on
\nMarch  27, 1954 after taking into account the share  of\t the
\nlosses\tas computed in the assessment of the two firms.\t  It
\nwill   be  noted  at  once  that  the  finding\t about\t the
\nincorrectness of the losses of the firm as estimated by -the
\nassessee  as also the completion of his assessment  preceded
\nApril  1, 1952 and on the view of the section which we\thave
\ntaken it could not be made applicable at all.  It was stated
\nin express terms by this Court
\n\t      “The power to rectify assessment of a  partner
\n\t      consequent upon the assessment of the firm  of
\n\t      which   he  is  a\t partner  by  including\t  or
\n\t      correcting  his  share of profit or  loss\t can
\n\t      therefore\t be  exercised only in the  case  of
\n\t      assessment of the firm made on or after  April
\n\t      1, 1952.”\n<\/p>\n
The  decision  in Habibullah’s(1) case therefore in  no\t way
\nconflicts  with\t the view of S. 35(5) which  we\t have  taken
\nabove.\t III  passing,\thowever, it may\t be  noted  that  in
\nHabibullah’s(1)\t case a reference was made to sub-s. (6)  of
\nS.  35 which was introduced in the statute book by s. 19  of
\nthe  Amendment Act of 1953 it the same time was sub-s.\t(5).
\nThere are certain words in sub-s. (6) which -,Ire not to  be
\nfound  in sub-s. (5) and on a contrast between the  language
\nused   in   the\t two  sub-sections  it\t was   observed\t  in
\nHabibullah’s(1) case :\n<\/p>\n
\t      “When  the Legislature under cl. (6) of s.  35
\n\t      expressly\t authorised  rectification  in\t the
\n\t      circumstances  mentioned therein even  if\t the
\n\t      assessment  has  been  completed\tbefore\t the
\n\t\t\t    Indian Income-tax (Amendment) Act, 195
\n3, and it
\n\t      made no such provision in cl. (5), it would be
\n\t      reasonable  to infer that the Legislature\t did
\n\t      not intend to grant to the revenue authorities
\n\t      a power to rectify assessments falling  within
\n\t      cl.  (5)\twhere  the  firm’s  assessment\t was
\n\t      completed before April 1, 1952.”
\n\t      (1)   [1962] Supp.2 S.C.R.1,716.\n<\/p><\/blockquote>\n
\t      41<\/span><\/p>\n
This reasoning was advanced before us in aid of the argument
\nthat  sub-s.  (5)  should have\tno  retrospective  operation
\nbeyond April 1, 1952.  We do not want to express any view as
\nto the interpretation of sub-s. (6) but in our opinion, sub-
\ns. (5) was clearly intended to give retrospective effect  to
\nfinal  orders made in the case of the firm by  incorporation
\nof  the\t result\t thereof in the case of the  partner  as  an
\nindividual.\n<\/p>\n
The  second decision of this Court is that of  Second  Addl.
\nIncome-tax Officer v. Atmala Nagaraja<\/a>(1).  In this case\t the
\nproceedings related to the assessment of the respondent\t for
\nthe  assessment year 1950-51.  The respondent in one of\t the
\nappeals\t was  assessed as an individual while in  the  other
\nappeal\tthe  respondent was assessed as\t a  Hindu  undivided
\nfamily.\t The original assessment was completed in both cases
\non  January 22, 1952.  The two assessees held shares in\t two
\nregistered  firms and the shares from the profits  of  these
\nfirms  were  included in the assessable income\tof  the\t two
\nrespondents.  The assessments of the firms were completed by
\nan  order dated October,16, 1954 when it was found that\t the
\naggregate shares of income from the two firms in the case of
\neach  of the respondents were more than that for  what\tthey
\nhad  been assessed.  After starting proceedings under s.  35
\nan  additional\tdemand was made\t whereupon  the\t respondents
\nmoved the High Court of Andhra Pradesh.\t After referring  to
\nHabibullah’s  (2)  case and K.\tLakshmimarayana\t Chetty’s(3)
\ncase it was said :\n<\/p>\n
\t      “The assessment of the respondents was a final
\n\t      assessment  before  April 1,  1952,  and\tsub-
\n\t      section  (5) has not been made  applicable  to
\n\t      such   assessment,  either  expressly  or\t  by
\n\t      implication.   It\t has been  given  a  limited
\n\t      retrospectivity from April 1, 1952, and it was
\n\t      held  by this court in the cited case that  it
\n\t      was   not\t  open\tto  courts  to\t give\tmore
\n\t      retrospectivity  to it.  Resort in  this\tcase
\n\t      could  only  be taken to the law as  it  stood
\n\t      before  the introduction of  sub-section\t(5),
\n\t      and  as determined already by this court,\t the
\n\t      record of the firm’s assessment could not then
\n\t      be  called in aid to demonstrate an  error  on
\n\t      the record of a partner’s assessment. . . . In
\n\t      our opinion, sub-section (5) could not be used
\n\t      in  this\tcase, and the decision of  the\tHigh
\n\t      Court was right.”\n<\/p><\/blockquote>\n
With very great respect, we find ourselves unable to concur.
\nAs  we\thave already said, sub-s. (5) becomes  operative  as
\nsoon  as it is found on the assessment or  re-assessment  of
\nthe  firm  or on any reduction or enhancement  made  in\t the
\nincome of the firm
\n(1) 46 I.T.R. 609.\n<\/p>\n
L 10 Sup.(CI)168-4
\n(2)  [1962] Supp. 2 S.C.R. 716.\n<\/p>\n
(3) 29 I.T.R. 419.\n<\/p>\n
42<\/span><\/p>\n
that  the share of the partner in the profit or loss of\t the
\nfirm had not been included in the assessment of the  partner
\nor  if\tincluded  was not correct.  The\t completion  of\t the
\nassessment  of the partner as an individual need not  happen
\nafter  April  1,  1952.\t The  completed\t assessment  of\t the
\npartner is the subject matter of rectification and this\t may
\nhave  preceded\tthe above mentioned date.   Such  completion
\ndoes  not control the operation of the sub-section.  In\t the
\nresult,\t we find ourselves unable to concur in the  decision
\nor the reasoning in Atmala Nagaraj’s(1) case.
\nThe last case in the series is that of Ahmedabad Manufactur-
\ning  and  Calico Printing Co. Ltd. v. S. C. Mehta (2  ).  In
\nthis  case  the Court had to consider sub-s. (10) of  s.  35
\nwhich was introduced by s. 19 of the Finance Act, 1956.\t The
\nBench  hearing this appeal was composed of five\t Judges\t and
\ntwo  of them, S. K. Das and J. L. Kapur, JJ., took the\tview
\nthat  Habibullah’s (5) case had been correctly\tdecided\t but
\nthat Atmala Nagaraj’s(1) case might require re-consideration
\nalthough  they\tdid not express any final  opinion  on\tthat
\npoint.\tSarkar, J. ‘(as he then was) did not think that much
\nassistance  could be had from Habibullah’s case(-;)  in\t the
\nmatter\tof interpretation of sub-s. (10) of s. 35.  He\tsaid
\nfurther:\n<\/p>\n
\t      “There  is  nothing in S.\t K.  Habibullah’s(3)
\n\t      case  to indicate that in the opinion  of\t the
\n\t      learned  Judges  deciding it  there  were\t any
\n\t      words which would indicate that sub-s. (5) was
\n\t      to  have\ta retrospective\t operation.   In  my
\n\t      view, sub-s. (10) contains such words.”\n<\/p><\/blockquote>\n
The  judgment  of  the two other  Judges,  Hidayatullah\t and
\nRaghubar  Dayal, JJ. was delivered by Hidayatullah,  J.\t who
\ndealt  with  the  subject  of  retrospective  operation\t  of
\nstatutes  elaborately and discussed Habibullah’s case(1)  at
\nsome length and expressed the view (at p. 125) that although
\nthe  section  mentioned\t the  final  order  in\tthe   firm’s
\nassessment as the starting point “there was nothing to\tshow
\nthat  this new terminus a quo must be after 1-4-1952  before
\nsub-s.\t(5)  could be used.” According to  Hidayatullah,  J.
\n“the  words of the sub-section were entirely indifferent  to
\nthis  aspect.” The learned Judge was however careful to\t add
\nthat  this  must not be considered as his final\t opinion  on
\nsub-s.\t(5).  Any opinion of Hidayatullah, J. even with\t the
\nabove  qualification  merits  the  highest-respect.    After
\ngiving very anxious consideration to the views expressed  by
\nthe learned Judge, we still hold that by sub-s. (5) of s. 35
\nthe  legislature intended that rectification should be\tmade
\non the finding as to the incorrectness of the assessment  of
\nthe  firm after the provision was introduced in the  statute
\nbook, viz., 1-4-1952.  There would have been nothing  unjust
\nor   inequitable   in\tthe   legislature   directing\tthat
\nrectification
\n(1) 46.\t I.T.R. 609.\t  (2) [1963] Supp. 2 S.C.R. 92.
\n(3)  [1961] Supp.  1 S.C.R. 716.\n<\/p>\n
43<\/span><\/p>\n
of  the assessment of the partner should always\t follow\t the
\nassessment  or re-assessment of the firm made  finally.\t  On
\nthe  other  hand, we think rectification  of  the  partner’s
\nassessment should logicallyfollow  the\tre-assessment  or
\nmodification  of  the firm’s assessment.   Otherwise,  there
\nwould  be an unaccounted for divergence between\t a  person’s
\nassessment as an individual and his assessment as a  partner
\nof  a  firm.  But the legislature, in our opinion,  did\t not
\nintend\tto disturb completed assessment of  partners  except
\nwithin the period of time indicated earlier in this judgment
\nand unless the finding as to the incorrectness of the firm’s
\nassessment  was\t made after the terminus a  quo\t above\tmen-
\ntioned.\n<\/p>\n
In  the result, the appeals are allowed.  The  judgment\t and
\norder  of  the High Court of Madras are set  aside  and\t the
\norders of rectification passed by the Income-tax Officer are
\nheld to be effective and binding on the respondents.  In the
\ncircumstances  there  will be no order as to  the  costs  of
\nthese appeals.\n<\/p>\n
Hegde,\tJ.  The\t respondents  in  these\t appeals  were\t the
\npartners,  of  a  registered firm carrying  on\tbusiness  in
\ngunnies.   For\tthe  assessment\t year  1943-44,\t i.e.,\t the
\nassessment year ending March 31, 1944, the firm. in question
\nwas assessed to tax on 22-1-46.\t Two days thereafter, namely
\non January 24, 1946, the partners of the said firm were also
\nassessed to tax for the assessment year 1943-44 after taking
\ninto consideration their share of profits in the firm.\t The
\nIndian Income Tax Act 1922, to be hereinafter referred to as
\nthe  Act, was amended by Act 25 of 1953.  The said  amending
\nAct  among other provisions incorporated s. 35(5)  into\t the
\nAct.  Section 1(2) of that Act provided that “subject to any
\nspecial provision made in this behalf in this Act, it  shall
\nbe  deemed to have come into force on the 1st day  of  April
\n1952”.\tOn September 11, 1952, the ITO issued notice to\t the
\nfirm under s. 34 of the Act requiring the firm to show cause
\nwhy  its assessment for the assessment year  1943-44  should
\nnot  be re-opened and enhanced for the reasons mentioned  in
\nthat   notice.\t In  the  proceedings  that   followed\t the
\nassessment  of the firm was substantially enhanced on  30-5-\n<\/p>\n
59.   Thereafter,  the proceedings against  the\t respondents
\nwere initiated under s. 35(5) read with s. 35(1) as per\t the
\nnotices dated 24-7-59.\tIn those proceedings the  assessment
\nof  the\t respondents  for the assessment  year\t1943-44\t was
\nenhanced.  The respondents challenged the validity of  those
\nproceedings  in\t the High Court of Judicature at  Madras  in
\nwrit  petitions\t 1229-1233 of 1961 on its  file.   The\tHigh
\nCourt  following the decisions of this Court in\t Income\t Tax
\nOfficer,  Madras  v.  S.   K.  Habibullah<\/a>  (1)\tand   Second
\nAdditional Income Tax Officer, Guntur v. Atmala Nagaraj\t and
\nothers<\/a>(2), allowed those writ petitions and quashed
\n(1) 119621 Supp. 2 S.C.R. 716.\n<\/p>\n
(2) 46 I.T.R. 609.\n<\/p>\n
44<\/span><\/p>\n
the impugned orders.  These appeals are directed against the
\nsaid decision.\n<\/p>\n
As  the matters now stand, the question of law\tarising\t for
\ndecision  is  not  res\tintegra.  It  is  concluded  by\t the
\ndecision of this Court in Atmala Nagaraj’s(1) case,  wherein
\nthis  Court  laid  down\t that sub-s. 5\tof  S.\t35  was\t not
\napplicable  to cases where the assessment of a partner of  a
\nfirm  was  completed before April 1, 1952  even\t though\t the
\nassessment of the firm was completed after April 1, 1952.
\nEvidently,  encouraged\tby some of the observations  in\t the
\ndecision  of this Court in Ahmedabad Mfg. & Calico  Printing
\nCo., Ltd. v. S. S. Mehta, Income Tax Officer and<\/a> another(1),
\nMr.  S.\t K.  Aiyer,  learned  counsel  for  the\t  department
\ncontended that Habibullah’s (3) case and Atmala Nagaraj’s(1)
\ncase  were  not correctly decided and that  they  should  be
\noverruled.   Though  the majority have not  acceded  to\t the
\ncontention of Mr. S. K. Aiyer that Habibullah’s(1) case\t has
\nnot  been correctly decided, it has accepted his  contention
\nthat Atmala Nagarajs(1) case was not correctly decided.\t  As
\nI am unable to concur with that conclusion, I am constrained
\nto deliver this dissenting judgment.  In my opinion, no case
\nis made out to overrule the decision of this Court either in
\nHabibullah’s(3) case or in Atmala Nagaraj’s(1) case.
\nAs  seen earlier, the assessments in question were  made  as
\nfar  back as January 24, 1946.\tEvery assessment  under\t the
\nAct  is\t final\tunless the same is  modified  in  appeal  or
\nrevision  or reopened under S. 34 or rectified under S.\t 35.
\nThe assessment with which we are concerned in this case\t was
\nneither modified in appeal or revision nor reopened under s.\n<\/p>\n
34.   The  question  for  decision  is\twhether\t it  can  be
\nrectified under S. 35.\n<\/p>\n
Under  the Act, the assessment of a firm and the  assessment
\nof  its\t partners are two different  assessments  though  in
\nassessing a partner his share in the firm’s profits is added
\nto  his other income.  In fact, the profits of a  registered
\nfirm are subject to double tax, firstly in the hands of\t the
\nfirm  and nextly in the hands of its partners.\tAs  the\t law
\nstood  prior to the amending Act 25 of 1953, the  assessment
\nof  a partner could not be rectified under S. 35(1)  on\t the
\nground\tthat  the firm’s assessment had been enhanced  as  a
\nresult of re-assessment.  In other words, the  re-assessment
\nof a firm could not be considered as a mistake apparent from
\nthe records of the assessment of its partners.\tThat was the
\nview taken by the Andhra Pradesh High Court in Kanumarlapudi
\nLakshminarayana\t Chetty\t v.  First  Additional\tIncome\t tax
\nOfficer, Nellore(1) and that view was accepted as correct by
\nthis Court in Habibullah’s case(1).  Therefore, all that  we
\nhave to see is whether
\n(1)  46 I.T.R. 609.\n<\/p>\n
(3)  [1962] Sup. 2 S.C.R. 716.\n<\/p>\n
(2)  [1963] Supp. 2 S.C.R. 92.\n<\/p>\n
(4)  29 I.T.R. 419.\n<\/p>\n
45<\/span><\/p>\n
35(5)  one of the group of clauses added by Act 25  of\t1953
\ncould have been availed of by the ITO in making the impugned
\nrectifications.\n<\/p>\n
Section\t 35(5),\t the extent it is material for\tour  present
\npurpose, reads as follows :\n<\/p>\n
\t      “Where in respect of any completed  assessment
\n\t      of  a  partner in a firm, it is found  on\t the
\n\t      assessment or reassessment of a firm …. that
\n\t      the share of the partner in the profit or loss
\n\t      of  the  firm  has not been  included  in\t the
\n\t      assessment of the partner, or, if included, is
\n\t      not correct, the inclusion of the share of the
\n\t      assessment  or the correction thereof, as\t the
\n\t      case   may  be,  shall  be  deemed  to  be   a
\n\t      rectification  of a mistake apparent from\t the
\n\t      record within the meaning of this section, and
\n\t      provisions  of  sub-sections (1)\tshall  apply
\n\t      thereto accordingly, the period of four  years
\n\t      referred to in that sub-section being computed
\n\t      from the date of the final order passed in the
\n\t      case of the firm.”\n<\/p><\/blockquote>\n
Section 35(1) empowers the income tax authorities to rectify
\nmistakes  apparent from the record of certain orders  passed
\nby them.  The clause (omitting parts not material)  provides
\nthat  the income tax officer may, any time within  the\tfour
\nyears  from the date of any assessment order passed by\thim,
\non  his\t own motion, rectify any mistake apparent  from\t the
\nrecord\tof  the assessment.  As seen earlier, prior  to\t the
\namending  Act  25 of 1953, the ITO could not have  made\t the
\nrectifications with which we are concerned in these appeals.
\nTherefore,  the\t question  for decision is  whether  by\t the
\nexercise of the powers conferred on him by s. 35(5), the ITO
\ncould have validly made the impugned rectifications ?
\nIt  may be noted that in these cases both the assessment  of
\nthe firm as welt as the assessment of its partners were made
\nlong  before April 1, 1952.  But the assessment of the\tfirm
\nwas  reopened and the firm reassessed after that  date.\t  In
\nHabibullah’s(1)\t  case\tthis  Court  laid  down\t  that\t the
\nlegislature  had  given\t to  cl.  5  of\t s.  35\t which\t was
\nincorporated  with  effect  from April 1,  1952,  a  partial
\nretrospective operation.  The provision enacted by cl. 5  is
\nnot  Procedural in character.  It affects the vested  rights
\nof  the\t assessee.  Therefore in the absence  of  compelling
\nreasons,  the  court  would not be  justified  in  giving  a
\ngreater retrospectivity to that provision than is  warranted
\nby the plain words used by the legislature.  Cl. 5 of s.  35
\ndoes  not purport to amend cl.\tI of the same  section.\t  It
\nconfers\t additional powers upon the income  tax\t authorities
\nand that power cannot be exercised in respect of  assessment
\nof a firm which had been completed before the date on  which
\nthe  power  had\t been  invested.   This\t Court\tquoted\twith
\napproval
\n(1)  [1962] Sup. 2 S.C.R. 716
\n46<\/span>
\nthe  observations  of  the  Privy  Council  in\tIncome\t Tax
\nCommissioner v. Khemchand Ramdas<\/a>(1) :\n<\/p>\n
\t      “When  once a final assessment is arrived\t at,
\n\t      it  cannot,  in their Lordships’\topinion,  be
\n\t      reopened except in the circumstances  detailed
\n\t      in  sections  34 and 3 5 of  the\tAct….\t and
\n\t      within the time limited by those sections.”\n<\/p><\/blockquote>\n
From  this decision the correctness of which is not  doubted
\nby   the  majority,  it\t follows  that\ts.  35(5)  is\tonly
\nretrospective  as  from April 1, 1 952; it  has\t no  greater
\nretrospectivity\t and  that  section  cannot  affect   vested
\nrights.\t  No  doubt  that  decision  was  dealing  with\t the
\nassessment of a firm, but the ratio of that decision, in  my
\nopinion,  applies  with equal force to the assessment  of  a
\npartner\t If  the assessment of a firm made before  April  1,
\n1952  cannot be reopened under s. 35(1) read with s.  35(5),
\nthe same must be equally true of the assessment of a partner
\nof  a  firm.  The ratio of the decision\t in  Habibullah’s(1)
\ncase  is that rights which have become final prior to  April
\n1, 1952 cannot be affected by having recourse to s. 35(5).
\nBy  applying  the ratio of the decision\t in  Habibullah’s(2)
\ncase this Court held in Atmala Nagaraj’s(3) case that sub-s.
\n5 of s, 35 was not applicable to cases where the  assessment
\nof a partner was completed before April 1, 1952 even  though
\nthe  assessment of the firm of which he was the partner\t was
\ncompleted after April 1 1952.  At p. 612 of the report, this
\nis what this Court observed in Atmala Nagaraj’s(3) case :\n<\/p>\n
\t      “Here, the original assessment was made before
\n\t      the  amendment,  and to  that  assessment\t the
\n\t      amended\tprovision  cannot  still   be\tmade
\n\t      applicable  for the reason to be given by\t us,
\n\t      even though the assessments of the firms\twere
\n\t      after  April 1, 1952, and sub-section (5)\t has
\n\t      not  been made applicable to such\t assessment,
\n\t      either  -expressly or by implication.  It\t has
\n\t      been  given  a  limited  retrospectivity\tfrom
\n\t      April  1, 1952, and it was held by this  court
\n\t      in  the  cited case that it was  not  open  to
\n\t      courts  to  give more retrospectivity  to\t it.
\n\t      Resort in this case could only be taken to the
\n\t      law  as  it stood before the  introduction  of
\n\t      sub-section (5), and as determined already  by
\n\t      this   Court,   the  record  of\tthe   firm’s
\n\t      assessment could not then be called in aid  to
\n\t      demonstrate  an  error  on  the  record  of  a
\n\t      partne’s\tassessment.  It was further held  in
\n\t      S. K. Habibullah’s (2) case that the provision
\n\t      enacted  by sub-section (5) is not  procedural
\n\t      in character and that it affects vested rights
\n\t      of an assessee.  In our
\n\t      (1)65 I.A. 248.\n<\/p><\/blockquote>\n
\t      (3) 46 I.T.R. 609.\n<\/p><\/blockquote>\n
\t      (2) [1962] Supp. 2 S.C.R. 716
\n\t\t\t\t    47<\/span>
\n\t      opinion,\tsubsection (5) could not be used  in
\n\t      this case, and the decision of the High  Court
\n\t      was right.”\n<\/p><\/blockquote>\n
It  may\t be  noted that both  the  decisions  in  Habibullah
\ncase(1)\t and Atmala Nagaraj’s case(1) were rendered  by\t the
\nsame  Bench  (consisting S. K. Das, Hidayatullah  and  Shah,
\nJJ.)  I\t am  unable to accept the,  contention\tthat  Almala
\nNagarai’s  case(1)  laid down any new legal  principle.\t  It
\nmerely\tapplied\t the  principle laid  down  in\tHabibullah’s
\ncase(1)\t to the facts of that case.  In my opinion there  is
\nno legal basis to distinguish the one from the other.
\nIn  Ahmedabad Manufacturing and Calico Ptg.,  Co.,  case(3),
\nthis Court was called. upon to interpret the scope of sub-s.
\n10 of s. 35 of the Act which was brought into force on April
\n1, 1956.  The language of that provision is wholly different
\nfrom that of s. 35(5).\tIt is not clear from the report\t why
\nin that case it became necessary to consider the correctness
\nof  the decisions of this Court in Habibullah’s case(1)\t and
\nAtmala\tNagaraj’s ( 2 ) case.  But it appears that  in\tthe,
\ncourse of the arguments the correctness of’ those  decisions
\nwas put into issue.  Three separate judgment were  delivered
\nin  that case, one on behalf of S. K. Das and Kapur, JJ,  by
\nDas,  J.  another  on behalf of\t Hidayatullah  and  Raghubar
\nDayal,\tJJ. by Hidayatullah J, and the third by\t Sarkar,  J.
\nSarkar\tJ. in his judgment, merely referred to\tHabibullah’s
\ncase(1)\t and not to Atmala Nagaraj’s(1) case.  Dealing\twith
\nHabibullah’s case(1), this is what his Lordship observed :\n<\/p>\n
\t      “As  to  S. K. Habibullah’s case(1) I  do\t not
\n\t      think that much assistance can be had from it.
\n\t      It  applied the rule of presumption against  a
\n\t      statute having a retrospective operation-as to
\n\t      which rule, of course, there is no  dispute-to
\n\t      sub-s.  (5) of s. 35.  Now cases on the  cons-
\n\t      truction\tof one statute, are rarely of  value
\n\t      in  construing another statute. for each\tcase
\n\t      turns  on\t the  language\twith  which  it\t  is
\n\t      concerned and statutes are not often expressed
\n\t      in  the same language.  The language  used  in
\n\t      sub-ss. (5) and (10) seems to me to be  wholly
\n\t      different.    There  is  nothing\tin,  S.\t  K.
\n\t      Habibullah’s  case(1) to indicate that in\t the
\n\t      opinion  of  the learned\tJudges\tdeciding  it
\n\t      there were any words which would indicate that
\n\t      sub-s.(5)\t  was\tto  have   a   retrospective
\n\t      operation.   In my view, sub-s’ (10)  contains
\n\t      such  words.  Furthermore, I do not find\tthat
\n\t      the  other  considerations’ to  which  I\thave
\n\t      referred\tarose for discussion in\t that  case.
\n\t      In  my  view,  the  two  cases  are   entirely
\n\t      different.”\n<\/p><\/blockquote>\n
\t      (1)   [1962] Supp. 2 S.C.R. 716.\n<\/p><\/blockquote>\n
\t      (3) [1963] Supp. 2 S.C.R. 92.\n<\/p><\/blockquote>\n
\t      (2) 46 f.T. R. 609.\n<\/p><\/blockquote>\n
\t      48<\/span><\/p>\n
Das,  J.  accepted  the\t correctness  of  the  decision\t  in
\nHabibullah’s case(1) but while dealing with Atmala Nagaraj’s
\ncase (2 ) he observed :\n<\/p>\n
\t      “We  may\tpoint out, however, that  in  Second
\n\t      Additional   Income  tax\tOfficer\t v.   Atmala
\n\t      Nagaraj<\/a>(2) this court went a step further\t and
\n\t      held  that  sub-s.  (5)  of  s.  35  was\t not
\n\t      applicable  to cases where the  assessment  of
\n\t      the  partner  was completed  before  April  1,
\n\t      1952,  even though the assessment of the\tfirm
\n\t      was  completed after April 1,  1952.   Learned
\n\t      counsel  for  the appellant  frankly  conceded
\n\t      before us that he did not wish to go as far as
\n\t      that  and contend that even in a case where  a
\n\t      declaration  of dividend was made after  April\n<\/p><\/blockquote>\n
\t      1. 1956, sub-s. (10) would not apply;  because
\n\t      that  would make sub-s. (10) unworkable.\t The
\n\t      decision\tis  Second  Additional\tIncome\t Tax
\n\t      Officer  v.  Atmala  Nagaraj<\/a>(2)  may   perhaps
\n\t      require  reconsideration as to which  we\tneed
\n\t      not express any final opinion now, but so\t far
\n\t      as this case is concerned we see no reason why
\n\t      the,  principle in S. K. Habibullah’s  case(1)
\n\t      will not apply.”\n<\/p><\/blockquote>\n
But Hidayatullah, J. who as mentioned earlier was a party to
\nboth the decisions dealing with those decisions observed :\n<\/p>\n
\t      “We  do not naturally express a final  opinion
\n\t      on sub-s. (5).  We must leave that to a future
\n\t      case.   We  must, however, say  that  the\t two
\n\t      earlier  cases may have to be reconsidered  on
\n\t      some future occasion.”\n<\/p><\/blockquote>\n
For the reasons to be presently stated I would rather prefer
\nto  follow the decisions in Habibullah’s case(1) and  Atmala
\nNagaraj’s  case(2) which I am sure must have  been  rendered
\nafter  deep  consideration rather than\tthe  passing  doubts
\nhesitatingly expressed by two of the learned Judges who were
\nparties\t to  those  decisions.\tAs seen\t earlier,  even\t the
\nmajority   has\t not   shared  the   doubts   expressed\t  by
\nHidayatullah,  J. as regards correctness of the decision  in
\nHabibullah’s case(1).\n<\/p>\n
The  rule laid down in Habibullah’s(1) and Atmala  Nagaraj’s
\n(2 ) cases is a well settled rule.  Dealing with the  inter-
\npretation  of taxing statutes, it is observed in  Halsbury’s
\nLaws of England (Vol. 36, pp. 416-17)
\n\t      “The  language  of a statute imposing  a\ttax,
\n\t      duty   or\t  charge  must\treceive\t  a   strict
\n\t      construction  in\tthe sense that there  is  no
\n\t      room  for any intendment, and regard  must  be
\n\t      had to the clear meaning of the words.  If the
\n\t      Crown  claims a duty under a statute, it\tmust
\n\t      show  that  duty\tis  imposed  by\t clear\t and
\n\t      unambiguous  words, and where the\t meaning  of
\n\t      the statute is in doubt, it must
\n\t      (1) [1962] Supp., C.R.716
\n\t      (2) 46 I.T.R 669.\n<\/p>\n
\t      49<\/span><\/p>\n
\t      be   construed  in  favour  of  the   subject,
\n\t      however, much within the spirit of the law the
\n\t      case might otherwise appear to be; but a\tfair
\n\t      and  reasonable construction must be given  to
\n\t      the language used without leaning to one\tside
\n\t      or the other.\n<\/p>\n
\t      The  rule that the literal construction  of  a
\n\t      statute must be adhered to, unless the context
\n\t      renders  it  plain that  such  a\tconstruction
\n\t      cannot  be  put on the  words,  is  especially
\n\t      important\t in cases of statutes  which  impose
\n\t      taxation.\t   There   is  no   rule   admitting
\n\t      equitable\t construction of a  taxing  statute;
\n\t      that is to say cases which are not within\t the
\n\t      actual words of the statute cannot be  brought
\n\t      within  the  statute by consideration  of\t its
\n\t      governing principle or intention.”\n<\/p>\n
Rowlatt,  J.  observed in Cape Brandy  Syndicate  v.  Inland
\nRevenue Commissioner(1) :\n<\/p>\n
\t      “In  a  taxing Act one has to look  merely  at
\n\t      what  is clearly said.  There is no  room\t for
\n\t      any  intendment.\tThere is no equity  about  a
\n\t      tax.   There  is no presumption as to  a\ttax.
\n\t      Nothing  is  to be read in, nothing is  to  be
\n\t      implied.\t One  can only look  fairly  at\t the
\n\t      language used.”\n<\/p><\/blockquote>\n
These  principles have been accepted as correct both by\t the
\nEnglish Courts and the superior courts in this country.\t  It
\nis  now well settled that if the interpretation of a  fiscal
\nenactment  is in doubt, the construction most beneficial  to
\nthe  subject  should  he  adopted  even\t if  it\t results  in
\nobtaining an advantage to the subject; the subject cannot be
\ntaxed  unless he comes within the letter of the law and\t the
\nargument  that he falls within the spirit of the law  cannot
\navail the department.\n<\/p>\n
In  Commissioner of Income tax, Bombay v. Provident  Invest-
\nment  Co.,  Ltd. (2 )  this Court quoted with  approval\t the
\nfollowing, passage from an earlier decision of this Court in
\nA. V. Fernandez v.  State of Kerala<\/a>(3) :\n<\/p>\n
\t      “If the Revenue satisfies tile Court that\t the
\n\t      case  falls strictly within the provisions  of
\n\t      the law, the subject can be taxed.  If, on the
\n\t      other hand, the case is not covered within the
\n\t      four  corners of the provisions of the  taxing
\n\t      statute,\tno tax call be imposed by  inference
\n\t      or  by analogy or by trying to probe into\t the
\n\t      intentions   of\tthe   legislature   and\t  by
\n\t      considering  what\t was the  substance  of\t the
\n\t      matter.  We must of necessity, therefore, have
\n\t      regard to the actual provisions of the Act and
\n\t      the rules made there-\n<\/p><\/blockquote>\n
\t      (1) [1921] 1 K.B. 64.\n<\/p><\/blockquote>\n
\t      (3) 8 S.T.C. 561.\n<\/p><\/blockquote>\n
\t      (2) 32 I.T.R. 190.\n<\/p><\/blockquote>\n
\t      50<\/span><\/p>\n
\t      under  before  we can come to  the  conclusion
\n\t      that the appellant was liable to assessment as
\n\t      contended by the Sales Tax authorities.”\n<\/p><\/blockquote>\n
In  Commissioner  of  Income  tax,  Bombay  v.\t Elphinstone
\nSpinning  and  Weaving Mills Co., Ltd.<\/a>(1), this\t Court\theld
\nthat  if the words of the taxing statute fail, then so\tmust
\nthe.  tax.   The courts cannot, except rarely and  in  clear
\ncases, help the draftsmen by a favorable construction.
\nIn  Commissioner of Income tax, Bombay v.  Jalgaon  Electric
\nSupply Co., Ltd<\/a> (2)  this Court again observed :\n<\/p>\n
\t      “The income tax law seeks to bring within\t the
\n\t      net  of taxation certain class of income,\t and
\n\t      can  only\t successfully do so if it  frames  a
\n\t      provision appropriate to that end.  If the law
\n\t      fails  and  the tax payer\t cannot\t be  brought
\n\t      within  its letter, no question of  unjustness
\n\t      as such arises.”\n<\/p><\/blockquote>\n
\t      In  Banarsi  Debi and another  v.\t Income\t tax
\n\t      Officer,\tCalcutta,  and\tothers(1),  it\t was
\n\t      observed :\n<\/p><\/blockquote>\n
\t      “Before  construing  the section\tit  will  be
\n\t      useful   to  notice  the\trelevant  rules\t  of
\n\t      construction of a fiscal statute. In  Oriental
\n\t      Bank  Corporation v. Wright (5 A.C.  842)\t the
\n\t      Judicial\tCommittee  held that  if  a  statute
\n\t      professed to impose a charge, the intention to
\n\t      impose  a charge on the subject must be  shown
\n\t      by   clear  and  unambiguous   language.\t  In
\n\t      Canadian Eagle Oil Co. v. R. [1946] A.C.\t119,
\n\t      Viscount\tSimon L.C. observed : ‘In the  words
\n\t      of Rowlatt, J….. in a taxing Act one has to,
\n\t      look nearly at what is clearly said.  There is
\n\t      no  room\tfor  any intendment.   There  is  no
\n\t      equity  about a tax.  There is no\t presumption
\n\t      as  to  a\t tax.  Nothing is  to  be  read\t in.
\n\t      Nothing  is to be implied.  One can only\tlook
\n\t      fairly it the language used.”\n<\/p><\/blockquote>\n
\t      In  other\t words,\t a taxing  statute  must  be
\n\t      couched  in express and unambiguous  language.
\n\t      The   same  rule\tof  construction  has\tbeen
\n\t      accepted\tby this court in Gursahai Saigal  v.
\n\t      Commissioner  of\tIncome<\/a>\ttax  (48  I.T.R.  1)
\n\t      wherein it was stated: . It is well recognised
\n\t      that  the rule of construction that if a\tcase
\n\t      is not covered within the four corners of\t the
\n\t      provisions  of a taxing statute no tax can  be
\n\t      imposed  by  inference  or by  analogy  or  by
\n\t      trying  to  probe into the intentions  of\t the
\n\t      legislature  and by considering what  was\t the
\n\t      substance,
\n\t      (1) 40 I.T.R. 142.\n<\/p><\/blockquote>\n
\t\t\t (3) 53 I.T.R. 100, 104.\n<\/p><\/blockquote>\n
\t      (2) 40 I.T.R. 184.\n<\/p><\/blockquote>\n
\t      51<\/span><\/p>\n
\t      of  the  matter,\tapplies\t only  to  a  taxing
\n\t      provision\t and  has  no  application  to\t all
\n\t      provisions in a taxing statute’.”\n<\/p><\/blockquote>\n
In  Commissioner  of  Income tax, Madras  v.  Ajax  Products
\nLtd.<\/a>(1)\t this Court quoted with approval the rule laid\tdown
\nby  Rowlatt,  J. in Cape Brandy Syndicate case(1)  to  which
\nreference  has\talready\t been made.   It  went\tfurther\t and
\nobserved :\n<\/p>\n
\t      ” To put in other words, the subject is not to
\n\t      be taxed unless the charging provision clearly
\n\t      imposes the obligation.  Equally important  is
\n\t      the rule of construction that if the words  of
\n\t      a\t statute are precise and  unambiguous,\tthey
\n\t      must  be\taccepted as  declaring\tthe  express
\n\t      intention of the legislature.”\n<\/p><\/blockquote>\n
From   the  foregoing  decisions  it  is  clear\t  that\t the
\nconsideration  whether a levy is just or unjust, whether  it
\nis  equitable or not, a consideration which appears to\thave
\ngreatly\t weighed with the majority, is wholly irrelevant  in
\nconsidering  the  validity  of\ta  levy.   The\tcourts\thave
\nrepeatedly  observed that there is no equity in a tax.\t The
\nobservations of Lord Hatherley, L.C. in Pardo v.  Bingham(3)
\n“In  fact we must took to the general scope and\t purview  of
\nthe  statute,  and at the remedy sought to be  applied,\t and
\nconsider  what was the former state of the law, and what  it
\nwas  that  the Legislature contemplated”,  were\t made  while
\nconstruing, a non-taxing statute.  The said rule has only  a
\nlimited\t application  in  the  interpretation  of  a  taxing
\nstatute.  Further, as observed by that learned Judge in that
\nvery  case  the\t question  in  each  case  is  “whether\t the
\nlegislature had sufficiently expressed its intention” on the
\npoint in issue.\n<\/p>\n
I do not think that the impugned assessments can be said  to
\nbe  just or equitable even if that consideration is  at\t all
\nrelevant.   The\t assessments  of partners  of  firms,  whose
\nassessments had become final before April 1, 1952 cannot  be
\nreopened.    There  is\tno  just  or  equitable\t -round\t  to
\ndifferentiate  the  case  of  the  respondents\tfrom   those
\nassessees.    As  seen\tearlier,  the  assessment   of\t the
\nrespondents had become final as far back as 1946.The  would
\nhave arranged their affairs on that basis.   Thirteenyears
\nthereafter, they were called upon to pay additional tax.It
\ncannot be said that is just or equitable.\n<\/p>\n
This  takes me to the question whether the impugned  assess-
\nments  come clearly within the scope of s. 35(5).   That  is
\nthe only relevant consideration.  But before going into that
\nquestion  we must remind ourselves that the assessments\t of-
\nthe respondents had become final in the year 1946 and  under
\nthe  law  as it stood prior ‘Lo the enactment of  s.  35(5),
\nthose assessments could not
\n(1)55 I.T. R. 741. [1965] 1 S.C.R. 70)
\n(3) 4 Ch.  Appeals 735.\n<\/p>\n
(2) [1921] 1. K.B. 64.\n<\/p>\n
52<\/span><\/p>\n
have  been  interfered with.  Section 35(5)  unlike  several
\nother provisions in the amending Act of 1953 had been  given
\nonly  a\t partial  retrospective effect.\t It is\tmade  to  be
\noperative as from April 1, 1952.  In this background let  us
\nnow proceed to examine s. 35(5).\n<\/p>\n
Before\ta  case can be held to fall within the scope  of  S.
\n35(5), two requirements must be satisfied, namely, (1)\tthat
\nthe  assessment or reassessment of the firm must have  taken
\nplace  on or after April 1, 1952, and (2) the assessment  of
\nthe  partner  must be a “completed  assessment”.   The\tnext
\nquestion to be decided is whether the “completed assessment”
\nreferred  to  in s. 35(5) includes an assessment  which\t had
\nbecome final prior to April 1, 1952.\n<\/p>\n
I am unable to find out how the firm’s assessment could have
\nbeen  validly reopened under s. 34, in September  1952.\t  By
\nthe time the notice under s. 34 was issued, the eight years’
\nperiod\tof limitation prescribed in s. 34 had expired.\t But
\nthe validity of the firm’s re-assessment does not appear  to
\nhave been challenged at any time before the hearing of these
\nappeals.  Hence it is not safe to pursue that question.
\nThe  concept of a “completed assessment” was introduced\t for
\nthe  first time by the amending Act 25 of 1952.\t The Act  as
\nit stood till then only spoke of assessments, re-assessments
\nand rectification of assessments.  What did the\t legislature
\nmean  by  saying completed assessment” in s. 35 (5)  ?\tThat
\nexpression is not defined in the Act.  The legislature\tmust
\nbe  considered to have deliberately used that expression  in
\nplace of the expression “assessment” an expression  familiar
\nto courts and the connotation of which is well settled.\t  On
\nthe  basis  of\twell recognised canons\tof  construction  of
\nstatutes  we must give that expression a  meaning  different
\nfrom that given to “assessment”.  Evidently, the legislature
\nused  the expression “completed assessments” to\t distinguish
\nthat  class of assessments from assessments which are  final
\nunder the Act.\tIt appears to me, by using that\t expression,
\nthe  legislature intended that the assessment of  a  partner
\nshould\tnot  be considered as a final  assessment  till\t the
\nassessment  of the firm becomes final.\tIn other words,\t the
\npartner’s assessment would continue to be tentative till the
\ncompany’s  assessment  becomes final.  If that be  the\ttrue
\ninterpretation of the expression “completed assessment”,  as
\nI  think  it  is, then that expression\tcan  only  apply  to
\nassessments of partners made on or after April 1, 1952.\t The
\nrespondents’  assessments  as mentioned earlier\t had  become
\nfinal\tprior\tto  that  date.\t  Hence\t  the\trespondents’
\nassessments cannot be considered as “completed\tassessments”
\nwithin\tthe meaning of that word in s. 35(5).\tConsequently
\nthose  assessments must be held to be outside the  scope  of
\nthat section.\n<\/p>\n
53<\/span><\/p>\n
Section 35(5) neither expressly nor by necessary implication
\nempowers  the I.T.O. to reopen assessments which had  become
\nfinal.\tIf the legislature wanted to confer such a power  it
\nshould\thave said so as it did in s. 35 (6) and\t in  several
\nother  provisions  in the amending  Act,-ss.3(2),  7(2)\t and
\n30(2)  of  that\t Act.  Further, if  s.\t35(5)  empowers\t the
\nreopening  of  all final assessments of partners  of  firms,
\nwhere  was  the\t need  to  give\t that  provision  a  partial
\nretrospectivity\t ?.  That very\tcircumstance  negatives\t the
\ncontention of the department.  Even if it is to be held that
\nthe  expression\t “completed  assessment”  is  an   ambiguous
\nexpression, in that event also, the power conferred under s.
\n35  (5)\t could\tnot  have  been\t exercised  to\trectify\t the
\nassessments in question.\n<\/p>\n
From  the  foregoing it follows that the  decision  of\tthis
\nCourt in Atmala Nagaraj’s case(1) is correct.  Even assuming
\nthat  s. 3 5 (5) can receive a different interpretation\t and
\nthat interpretation is more reasonable than that adopted  by
\nthis  Court in Atmala Nagaraj’s case(1), in that  even\talso
\nthis Court would not be justified in overruling its previous
\ndecision, which has the force of law in view of Art. 141  of
\nthe Constitution.  I am of the opinion that the decisions of
\nthis  Court should not be overruled except under  compelling
\ncircumstances.\t It  is only when this Court is\t fully\tcon-
\nvinced that public interest of a substantial character would
\nbe  jeopardized by a previous decision of this\tCourt,\tthis
\nCourt should overrule that decision.  Every time this  Court
\noverrules  its\tprevious  decision, the\t confidence  of\t the
\npublic\tin  the soundness of the decision of this  Court  is
\nbound to be shaken.\n<\/p>\n
Re-consideration  of the decisions of this Court  should  be
\nconfined  to questions of great public importance.   In\t law
\nfinality is of utmost importance.  Legal problems should not
\nbe treated as mere subjects for mental exercise.  This Court
\nmust  overrule its previous decisions only when it comes  to
\nthe conclusion that it is manifestly wrong, not upon a\tmere
\nsuggestion  that  some or all of the members  of  the  later
\nCourt  might arrive at a different conclusion if the  matter
\nwas  res integra.  In Bengal Immunity Co. Ltd. v. The  State
\nof  Bihar and others<\/a>(2), this Court laid do” that  there  is
\nnothing in the Constitution which prevents the Supreme Court
\nfrom  departing from a previous decision of its own  if\t the
\nCourt  is satisfied of its error and its baneful  effect  on
\nthe  general  interest\tof the public.\t Das,  Acting  C.J.,
\nspeaking  for  the majority, observed in the course  of\t his
\njudgment (at p. 630 of the report):\n<\/p>\n
\t      “It  is needless for us to say that we  should
\n\t      not   lightly   dissent\tfrom   a    previous
\n\t      pronouncement  of\t this Court.  Our  power  of
\n\t      review,  which  undoubtedly  exists,  must  be
\n\t      exercised\t with due care and caution and\tonly
\n\t      for  advancing  the public well being  in\t the
\n\t      light of the surrounding
\n\t      (1)\t   46\t       I.T.R.\t\t609.\n<\/p><\/blockquote>\n
\t      (2) [1955] 2 S.C.R. 603.\n<\/p><\/blockquote>\n
\t      54<\/span><\/p>\n
\t      circumstances  of\t each case  brought  to\t our
\n\t      notice  but  we do not consider  it  right  to
\n\t      confine our power within rigidly fixed  limits
\n\t      as suggested before us.”\n<\/p><\/blockquote>\n
The question of law with which we are concerned in this case
\nwas  of minor importance, at all times.\t It has\t become\t all
\nthe  more  so  because of the passage of  time,\t as  it\t has
\nrelevance  only\t to  assessment of partners  of\t firms\tmade
\nbefore\tApril  1,  1952, and that too  in  cases  where\t the
\nquestion  of enhancing those assessments arises as a  result
\nof the assessment or re-assessment of the concerned firms on
\nor  after  April 1, 1952.  Such cases are not likely  to  be
\nmany.\n<\/p>\n
For  the  reasons mentioned above, I dismiss  these  appeals
\nwith Costs.\n<\/p>\n
\t\t\t   ORDER
\nIn  accordance with the opinion of the majority the  appeals
\nare  allowed,  the judgment and order of the High  Court  of
\nMadras are set aside and the orders of rectification  passed
\nby  the\t Income\t tax Officer are held to  be  effective\t and
\nbinding on the respondents.  In the circumstances there will
\nbe no order as to costs of these appeals.\n<\/p>\n
G.C.\n<\/p>\n
55<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Income-Tax Officer, Tuticorin vs T. S. Devinath Nadar & Ors on 25 October, 1967 Equivalent citations: 1968 AIR 623, 1968 SCR (2) 33 Author: G Mitter Bench: Wanchoo, K.N. (Cj), Bachawat, R.S., Ramaswami, V., Mitter, G.K., Hegde, K.S. PETITIONER: INCOME-TAX OFFICER, TUTICORIN Vs. RESPONDENT: T. S. DEVINATH NADAR & ORS. DATE […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-40084","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nIncome-Tax Officer, Tuticorin vs T. S. 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