Case: Income-Tax Officer, Tuticorin Vs. T. S. Devinath Nadar &amp; Ors

(5) includes an assessment which had become final prior to April 1, 1952. 37. I am unable to find out how the firms assessment could have been validly reopened under Section 34, in September 1952. By the time the notice under Sec. 34 was issued the eight years period of limitation prescribed in Section 34 had expired. But the validity of the firms reassesment does not appear to have been challenged at any time before the hearing of these appeals. Hence it is not safe to pursue that question. 38. The concept of a completed assessment was introduced for the first time by the amending Act 25 of 1952. The Act as it stood till then only spoke of assessments, re-assessments and rectification of assessments. What did the legislature mean by saying completed assessment Sec. 35 (5). That expression is not defined in the Act. The legislature must he considered to have deliberately used that expression in place of the expression assessment an expression familiar to courts and the connotation of which is well settled. On the basis of well recognised canons of construction of statutes we must give that expression a meaning different from that given to assessment Evidently, the legislature used the expression completed assessments to distinguish that class of assessments from assessments which are final under the Act. It appears to me, by using that expression, the legislature intended that the assessment of a partner should not be considered as a final assessment till the assessment of the firm becomes final. In other words, the partners assessment would continue to be tentative till the companys assessment becomes final. If that be the true interpretation of the expression completed assessment as I think it is, then that expression can only apply to assessments of partners made on or after April 1, 1952. The respondents assessment as mentioned earlier had become final prior to that date. Hence the respondents assessments cannot be considered as completed assessments within the meaning of that word in Section 35 (5). Consequently those assessments must be held to be outside the scope of that section. 39. Section 35 (5) neither expressly nor by necessary implication empowers the I. T. O. to reopen assessments which had become final. If the legislature wanted to confer such a power it should have said so as it did in Section 35 (6) and in several other provisions in the amending Act, Sections 3 (2), 7 (2) and 30 (2) of the Act. Further, if Section 35 (5) empowers the reopening of all final assessments of partners of firms, where was the need to give that provision a partial retrospectivity. That very circumstance negatives the contention of the department. Even if it is to be held that the expression completed assessment is an ambiguous expression, in that event also, the power conferred under Section 35 (5) could not have teen exercised to rectify the assessments in question. 40. From the foregoing it follows that the decision of this Court in Atmala Nagarajs case 1962-46 ITR 609 (SC) is correct.Even assuming that Section 35 (5) can receive a different interpretation and that interpretation is more reasonable than that adopted by this Court in Atmala Nagarajs case, 1962 46 ITR 609 (SC) In that event also this Court would not be justified in overruling its previous decision, which has the force of law in view of Article 141 of the Constitution.. I am of the opinion that the decisions of this Court should not be overruled excepting under compelling, circumstances. It is only when this Court is fully convinced that public interest of substantial character would he jeopardized by a previous decision of this Court, this Court should overrule that decision Every time this Court overrules its previous decision, the confidence of the public in the soundness of the decision of this Court is bound to be shaken. 41. Re-consideration of the decisions of this Court should be confined to questions of great public importance. In law finality is of utmost importance. Legal problems should not be treated as mere subjects for mental exercise. This Court must overrule its previous decisions only when it comes to the conclusion that it is manifestly wrong not upon a mere suggestion that some or as of the members of the later Court might arrive at a different conclusion if the matter was res integra. 42. In Bengal immunity Co. Ltd. v. State of Bihar, 1955-2 SCR 603 = (AIR 1955 SC 661 ),this Court laid down that there is nothing in the Constitution which prevents the Supreme Court from departing from a previous decision of its own if the Court is satisfied of its error and its baneful effect on the general interest of the public. Das, Acting C. J. speaking for the majority, observed in the course of his judgment (at p. 630 of the report of SCR) = (at p. 673 of AIR) : It is needless for us to say that we should not lightly dissent from a previous pronouncement of this Court. One power of review which undoubtedly exists, must be exercised with due care and caution and only for advancing the public weld being in the light of the surrounding circumstances of each case brought to our notice but we do not consider it right to confine our power within rigidly fixed limits as suggested before us. 43. The question of law with which we are concerned in this case was of minor importance, at all times. It has become all the more so because of the passage of time, as it has relevance only to assessments of partners of firms made before April 1, 1952, and that too in cases where the question of enhancing those assessments arises as a result of the assessment or reassessment of the concerned firms on or after April 1, 1952. Such eases are not likely to be many. 44. For the reasons mentioned above, I dismiss these appeals with costs. Order 45.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]7. Applying the above principles, we find that the aim of the legislation was to bring into line the assessment of the individual partner with that of the firm. It was well known that in many cases a firms final assessment dragged on for years while the assessments of the individuals composing of it were completed long before the assessment of the firm itself because in the case of individuals the matter was fairly simple It does not stand to reason that if the assessment of the firm is completed long after that of the individual by reason of proceedings under S. 34 or otherwise, the discrepancy in the income of the partner as shown by the assessment of the firm and as an individual should continue or be deft untouched and the obvious and logical course should be to rectify the assessment of the individual on the basic of the final assessment of the firm. Sub-s. (5) of S. 35 is only a step in that direction but the legislature in its wisdom thought it beet that assessments of individuals which had taken place before the final order in the assessment of the firm should not be disturbed except within four years therefrom. Under tax-Income-tax Act, 1922 a final assessment could not be altered except under proceedings sanctioned by S. 34 or S. 35 of the Act within the limits of time thereby prescribed. Leaving aside for a moment the point of time when sub-s. (5) came into the statute book, on a plain reading of the provision it appears to us that the legislature intended that the finding as to the non-inclusion of the proper share of the partner in the profit or loss of the firm in the assessment of the partner should excite the power of rectificationAs we have already said, sub-section (5) becomes operative as soon as it is found on the assessment or re-assessment of the firm or on any reduction or enhancement made in the income of the firm that the share of the partner in the profit or loss of the firm had not been included in the assessment of the partner or if included was not correct. The completion of the assessment of the partner as an individual need not happen after April 1, 1952. The completed assessment of the partner is the subject matter of rectification and this may have preceded the above mentioned date. Such completion does not control the operation of the sub-section. In the result, we find ourselves unable to concur in the decision or the reasoning in Atmala Nagrajs case, 1962-46 ITR 609   (SC). Any opinion of Hidayatullah, J. even with the above qualification merits the highest respect. After giving very anxious consideration to the views expresses by the reamed Judge, we still hold that by sub-s. (5) of S. 35 the legislature intended that rectification should be made on the finding as to the incorrectness of the assessment of the firm after the provision was introduced in the statute book, viz., 1st April, 1952. There would have been nothing unjust or inequitable in the legislature directing that rectification of the assessment of the partner should always follow the assessment or re-assessment of the firm made finally. On the other hand we think rectification of the partners assessment should logically follow the re-assessment or modification of the firms assessment. Otherwise, there would be an unaccounted-for divergence between a persons assessment as an individual and his assessment as a partner of a firm. But the legislature, in our opinion, did not intend to disturb completed assessment of partners except within the period of time indicated earlier in this judgment and unless the finding as to the incorrectness of the firms assessment was made after the terminus a quo above mentioned.