BHAGWATI, J. - (1.)THIS petition raises an interesting question of law relating to the power of the Income -tax Officer to rectify a mistake apparent from the record of the assessment after an appeal against a part of the assessment is disposed of by the Appellate Assistant Commissioner. The question arises under section 35, sub -section (1), of the Indian Income -tax Act, 1922. In order to appreciate the question it is necessary to state a few facts giving rise to the petition.
(2.)THE petitioner was at all material times a partner in a firm called M/s. Steel and Forms Work Co. The assessment of the petitioner as an individual for the assessment year 1959 -60 for which the relevant account year was the financial year ending 31st March, 1959, was completed by the Income -tax Officer on 9th March, 1960, and since the firm of M/s. Steel and Forms Work Co. had not been assessed at that time, the Income -tax Officer took the share of the petitioner in the profits of the said firm at nil subject to rectification and assessed the petitioner on a total income of Rs. 71,920. The firm of M/s. Steel and Forms Work Co. was thereafter assessed for the assessment year 1959 -60, by an order of assessment, dated 16th April, 1960. The said firm being aggrieved by the order of assessment preferred an appeal against it to the Appellate Assistant Commissioner. There were four items in dispute before the Appellate Assistant Commissioner. One item related to expenditure of Rs. 1,600 in the miscellaneous expenses account and the other related to expenditure of Rs. 2,517 in the car and motor vehicles maintenance account. Both these items of expenditure were disallowed by the Income -tax Officer, and the Appellate Assistant Commissioner affirmed the disallowance. The third item related to an addition of Rs. 45,000 to the book profits made by the Income -tax Officer. The Appellate Assistant Commissioner in appeal reduced the addition by 'a round of Rs. 8,000'. The last item challenged in appeal comprised two sums, namely, Rs. 600 spent on printing and stationery and Rs. 400 spent on electric fittings account. The Income -tax Officer had disallowed both these amounts at the Appellate Assistant Commissioner held that the disallowance was not correct and must be deleted. The Appellate Assistant Commissioner accordingly, by an order dated 18th May, 1961, partially allowed the appeal and directed the Income -tax Officer to modify the assessment in accordance with his decision. This decision was presumably carried out by the Income -tax Officer. Thereafter, on 25th February, 1963, the Income -tax Officer, after following the procedure prescribed by section 35, sub -section (1), rectified the assessment of the firm by adding back certain additional depreciation on motor car and motor -cycle which had been erroneously allowed in the original assessment. With a view to including the petitioner's share in the profits of the firm in the individual assessment of the petitioner, the Income -tax Officer issued a notice dated 7th December, 1965, calling upon the petitioner to show cause why the assessment should not be rectified as there was a mistake apparent from the record 'within the meaning of section 154/155 of the Income -tax Act, 1961'. The petitioner by his reply, dated 16th December, 1965, objected against the rectification of his assessment but the objection was in vain and the Income -tax Officer passed an order dated 9th March, 1966, rectifying the assessment of the petitioner by including a sum of Rs. 64,414 representing the petitioner's share in the profits of the firm. This order was headed 'Order under section 35 of the Indian Income -tax Act, 1922/Order under section 155 of the Income -tax Act, 1961'. The petitioner preferred an appeal against this order on the footing that it was an order under section 155. The Appellate Assistant Commissioner who heard the appeal took the view that by reason of section 297(2)(a), an order of rectification could be made by the Income -tax Officer only under section 35, sub -section (5), and not under section 155 and the order of rectification passed by the Income -tax Officer under section 155 was, therefore, invalid and he accordingly set aside the order of rectification. This led to the filing of an appeal to the Tribunal by the revenue. During the pendency of the appeal, however, the Income -tax Officer issued another notice dated 23rd September, 1966, calling upon the petitioner to show cause why his assessment should not be rectified under section 35, sub -section (5), with a view to including his share in the profits of the firm in his individual assessment. This show -cause notice was issued ex majore cautela on the assumption that the order passed by the Appellate Assistant Commissioner was correct and the original order of rectification dated 9th March, 1966, was invalid as one made under section 155. The petitioner showed cause but all the objections raised by him were overruled and the Income -tax Officer by an order dated the 6th December, 1966, rectified the assessment of the petitioner under section 35, sub -section (5). The petitioner thereupon filed the present petition challenging the validity of the order of rectification dated 6th December, 1966.
Whilst the petition was pending, the appeal preferred by the revenue against the order of the Appellate Assistant Commissioner came to be heard by the Tribunal. The Tribunal held that the order of rectification dated 9th March, 1966, was really an order under section 35, sub -section (5), and not under section 155 and no appeal, therefore, lay against it to the Appellate Assistant Commissioner and the Appellate Assistant Commissioner had no power to set it aside and on this view, the Tribunal reserved the order of the Appellate Assistant Commissioner and restored the order of rectification dated 9th March, 1966, passed by the Income -tax Officer. Having regard to this subsequent development, the petitioner applied for leave to amend the petition and, with leave of the court, amended the petition so as to include a challenge to the validity of the order of rectification dated 9th March, 1966. The petitioner also applied for a reference of the questions of law arising out of the order of the Tribunal and, on the application of the petitioner, two questions of law were referred by the Tribunal to this court in Income -tax Reference No. 28 of 1970. Both the questions of law were answered against the assessee by this court by a judgment delivered on 28th July, 1972, in Income -tax Reference No. 28 of 1970 and it was held that the view taken by the Tribunal was correct. The result is that we have now two orders of rectification under section 35, sub -section (5), one dated 9th March, 1966, and the other dated 6th December, 1966. Obviously, if the first order of rectification was valid, the second must be held to be ineffective. If, however, the first order of rectification is invalid on any ground, the second would also equally be invalid for the validity of both is challenged on the same grounds.

(3.)WE may now set out the grounds on which the validity of the two orders of rectification is challenged on behalf of the petitioner in the petition. They are :
'(A) The order of assessment passed by the Income -tax Officer against the firm of M/s. Steel and Forms Work Co. on 16th April, 1960, was merged in the order of the Appellate Assistant Commissioner dated 18th August, 1961, and the Income -tax Officer had, thereafter, in view of the merger, no jurisdiction to rectify the assessment of the said firm and the order of rectification dated 25th February, 1963, passed by the Income -tax Officer rectifying the assessment of the said firm was null and void. The final order passed in the case of the said firm was accordingly the order of the Appellate Assistant Commissioner dated 18th August, 1961, and since both the impugned orders of rectification were made more than four years after the date of the orders of the Appellate Assistant Commissioner, they were without jurisdiction and void as being outside the time limit provided in section 35, sub -section (5). (B) The final order in the case of the firm which the period of four years is to be computed within which an order of rectification can be passed under section 35, sub -section (5), does not include an order of rectification passed under section 35, sub -section (1), rectifying the assessment of the firm. The period of four years must, therefore, be counted from the date of the order of the Appellate Assistant Commissioner, namely, 18th August, 1961, and not from the date of the order of rectification of the firm's assessment, namely, 15th February, 1963. If that be so, the two impugned orders of rectification made by the Income -tax Officer are clearly beyond the time limit prescribed under section 35, sub -section (5), and must be held to be invalid.'

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