OAK J. - (1.) THE question for consideration in this writ petition is the true scope of sub -section (6) of section 35, Income -tax Act (hereinafter referred to as the 'Act'). Deo Sharma is the petitioner. He had two separate sources of income. Firstly, he had income from his share in the firm, M/s. L. N. Gadodia & Company, Kanpur, to the extent of 0 -4 -0 in the rupee. Secondly, he received by way of renumeration one -fourth share in the net profits of a certain retail shop at Kanpur for managing that shop. Initially, income -tax was assessed on the footing that the petitioners one -fourth share in the net profits of the retail shop constituted income from business, and he was subjected to excess profits tax under the Excess Profits Tax Act, 1940. On that basis, an order was passed on February 22, 1947, assessing the petitioner to income -tax for three separate assessment years, 1944 -45, 1945 -46 and 1946 -47. The petitioner contested his liability to pay excess profits tax. That matter was referred to this court under section 66(1) of the Act. That reference was answered by this court in favour of the petitioner. In view of that decision, that Income -tax Appellate Tribunal excluded that income from excess profits tax assessments for those years. As a consequence of that proceeding, the Income -tax Officer, Kanpur, passed three separate orders on May 18, 1956, for assessment of income -tax for those three years. The order dated dated May 18, 1956, resulted in enhancement of the income -tax. The petitioner filed an objection protesting against the alleged rectification of the assessment. That objection was rejected by the Income -tax Officer. An appeal filed by the petitioner was dismissed by the Appellate Assistant Commissioner. A revision filed by the petitioner was also dismissed by the Commissioner of Income -tax. This writ petition is directed against these orders of the Income -tax Officer, Kanpur, and the Income -tax Commissioner, Lucknow.
(2.) RESPONDENT No. 1 took action in the matter under sub -section (6) of section 35 of the Act. Section 35(6) of the Act is in these terms : 'Where the excess profits tax or the business profits tax payable by an assessee has been modified in appeal, revision or any other proceeding, or where any excess profits tax or business profits tax has been assessed after the completion of the corresponding assessment for income -tax (whether before or after the commencement of the Indian Income -tax (Amendment) Act, 1953), and in consequence thereof it is necessary to recompute the total income of the assessee chargeable to income -tax, such recomputation shall be deemed to be a rectification of a mistake apparent from the record within the meaning of this section, and the provisions of sub -section (1) shall apply accordingly, the period of four years referred to in that sub -section being computed from the date of the order making or modifying the assessment of such excess profits tax or business profits tax.' It was urged for the petitioner before the respondents and before this court that, considering that the initial assessment was done in the year 1947, the assessment could not be revised under sub -section (6) of section 35 of the Act. The dates bearing on this question are these. Initially, assessment of income -tax for three years was made on February 22, 1947. As a consequence of the other proceeding under the Excess Profits Tax Act, the Income -tax Appellate Tribunal passed an order on January 19, 1954, for refund of the excess profits tax. The impugned order was passed by respondent No. 1 on May 18, 1956. The question for consideration is whether it was possible to take action in the year 1956 with reference to an assessment of income -tax made in the year 1947.
(3.) SUB -section (5), (6) and (7) were inserted in section 35 of the Income -tax Act by the Indian Income -tax (Amendment) Act, 1953 (No. XXV of 1953). It was provided in the Amendment Act that the amendment would have effect from April 1, 1952. Mr. R. L. Gulati appearing for the petitioner contended that, considering that the amendment took effect from April 1, 1952, only, no action is permissible for revising an assessment made prior to that date.;