Income-Tax Officer, Tuticorin v. T. S. Devinath Nadar & Ors.

**B** **c** **D** E - F G be~n **brought into force from** **an** **anterior date no greater retrospectivity** could be given to it. HELD : _(Per_ Wanchoo CJ., Bachawat, Ramaswami and Mitter. JJ.). The aim of the legislation was to bring into line the assessment of the individual partner with that of the firm. It does not stand to reason that if the assessment of the firm is completed Jong after that of the individual by reason of proceeding;; 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 left untouched. and the obvious and logical com-,;e should be to rectify the assessment of the individual on the basis of the final assessment of the firm. [39B] On a plain reading of s. 35(5) it appears 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 firrri in the assessment of the partner should **excite the power** **of** **rectification.** **The power** **is** **to be exercised whenever** **"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!'** **The subject** **matter** **of** **rectification** **is** **the completed assessment** **of** **a partner** **in** **the** **:firm.** **This** **is** **brought out by the use** **of** **the words** **"when** **in** **rcsoect** **of** **any completed assessment** **of** **a· partner** **in** **a** **firm."** **· "Fhere** **is** **nothing in** **the section to show that such "completed assessment"** **must take place** afters. 35(5) was brought on the statute book. What must take place to **give rise** **to** **the** **power** **of** **rectification** **is** th~ **finding on** t~e **assessment** **or** **INCOME-TAX OFFICER, TUTICORIN** _v._ **T.** **S.** **DEVINATH** **NADAR** **&** **ORS.** _October_ 25, 1967 (K. N. WANCHOO, C.J., R. S. BACHAWAT, V. RAMASWAMI, G. K. MITTER AND K. S. HEGDE, JJ.] _Indian Income-tax Act,_ 1922 _as_ _amended by_ _Act_ 25 _of_ 1953, _s._ 35(5) - _**-Rectifictition of partner's**_ _**assessment**_ _**consequent**_ _**on**_ _**reassessment**_ _of_ _firm-Section permitting such r.ctification in_ _re,.pect_ _of_ _"completed_ _assessment"_ _of_ _partners-Section whether applies_ _to_ _partner's_ _assessmenrs_ _finalised_ _before_ _1st_ _April_ 1952. The respondent and his four brothers were partners in a firm carrying · on. business in gunnies. The assessment of the firm for the year 194344 was compleied on January 22, 1946 and the share income of each partner was also determined. The as.•essment of the respondent as an individual **on the basis** **of** **his share so determined was completed** **on January 24,** 1946. Subsequently the assessment of the firm was reopened by notice under s. 34 of the Indian Income-tax Act, 1922 issued on September 11. **1952** **and** **re-assessment** **by** **including some additional income was made** in May 1959. In July 1959 notice under s. 35(5) was served on the **respondent for consequential rectification** **of** **his assessment as** **an** **indivi-** **dual.** **The rectification was ultimately ordered** **to** **be** **made** **in** **August** 1959. The respondent filed a writ petition )n the High Co.urt for quashing· the order. Relying on the decision of this Court in _Second Addi._ _**Income-tax Officer**_ **v.** _**Atmala Nagaraj**_ **the High Court quashed the im-** **pugned order. The Revenue appealed to this Court: The question** **that** fell for consideration was whether s. 35(5) which was introduced by the Income-tali Amendment Act, 1953 could be used to rectify assessments made before ht Aoril 1952. the date from which the said amendment **came into force.** **The respondent urged that since the** **amendment had** 34 SUPREME COURT REPORTS (1968) 2 S.C.R. r~~. or the firm. The finding alone must be made after **the** **lll!Ctior\** came into force. The finding IS to be given effect to or maile operative on the 'completed a~'lessment' of a partner. As the mischief sought to be rectified was the discrepancy hetween the income of the part**ner auesscd** **as** **lln** **individual and his income as computed** **on** **the** **assess-** ment of the firm, the legislature must be held to have made the remedy applicable whenever the mischief was discovered. There would have been nothing unjull in making the power of rectification exercisable at any time alter lhc discovery of the discrepancy but !he legislalure in its wisdom did not think that the power should be used except within a limited period of four years from the date of the final order in the ca;e of the firm. 1390-HJ .. _Second Addi. lncome_ _[0]_ _1ax_ _0/Tkn_ v. _Atma/4 Nagaraj_ 46 I.T.R. 609, reversed. **A** **B** _Km1umar/rrpuc//_ _Ldhhmlnaraynna_ _Chmy_ v, _First Additional_ _lncomt-_ _tux Officer, Ne/lore,_ 29 I.T.R. 419, _lncoltl4-tcrx_ _Officer,_ _Madras_ v. _S._ _**K.**_ **·** **C** _Habihul/nli, Madras,_ [1962] Supp. 2 S.C.R. 716, _Pardo_ v. _Bingham,_ ~.R. 4 Chancery Appeals 735 and _Ahmedahad_ _Manufacturing and_ _CaJJco_ _Pr/11tillg_ _Co. Ltd._ v. _S._ _C._ _Melita,_ [1963] Supp. 2 S.C.R. 92, referred IQ, _Per_ Hegde, J _(di.rsenting)._ The as:;cssments of the respondents had beco:ne final in the year 1946 and under the law as it stood prior to the enactment of s. _35_ ( 5) those assessments could. not have been interfered with. Section _35(5)_ neither expressly nor by necessary implication em**pawers the Income-tax Officer to reopen assessments which** **had** **become** final. If the section empowers the reopening of all final assessments of the **partners** **of** **firm. lherc** **\\·as** **no need to give that provision a partial retros-** _r_ ' peclivity. [51H: 52A] The legislature used the expression "completed assessment" in s. _35(5)_ **to** **distinguish that class** **of** **assessment from assessments which arc** **made** **final** **under** **the** **Act.** **By** **using that expression the legislature intended** **that** _**the**_ **assessment** **of** **a partner should not** **be** **considered** **as** **a** **final** **assess-** ment till the assessment of !he firm becomes final. Jn other words the **partner.;'** **assessment** **"'·oukl** **continue to** **be** **tentative** **till** **the firm's assess-** **ment becomes final.** **If** **that** **be** **lhc** **true** **interpretation** **of** **!lie expression** **"completed assessment ..** **then the expression can** **only apply to** **assess-** ments of partners made on or after April I, 1952. The respondents' **assessments** **could not** **be** **considered** **as** **.. completed** **assc.;sment.!i''** **within** the me-•ninJ of that word ins. 35(5). [52F-H] **The** **decision** **of** **this Court in** _**Ata1nla Nagarafs**_ **case is correct. Even** **.ao;suming** **that's.** **35(5)** **can receive a different interpretation, this** **Court** **would not** **be** **justified in overruling** **its** **previous decision except** **under** **compclJing circumstances; otherwise confidence** **of** **tbe** **public** **i"n** **the** soundn~s of the dedsion of this Court is bound to he shaken. [53C-E] _Bengal_ _lnw11111ity_ _Co. Ltd._ v. _State_ _of_ _Biliar_ & _Ors.,_ [1955) 2 S.C.R. 603, relieJ on. C..ise Jaw referred to. CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2154 to 2158 of 1966. **D** E F G **H** - Appeals by special leave from the judgment and order dated March 27, 1963 of the Madras High Court in Writ Petitions Nos. 1229 to 1233 of 1961. _S._ _K. A_ _iyar_ and _R._ _N._ _Sachthey,_ for the appellant (jn all the .appeals). _T._ _A._ _Ramachandmn,_ for the respondents (in all the appeals). C.I.T. v. DEVINATH _(Mitter,_ J.) 35 .. A The Judgment of WANCHOO, C.J., B_ACHAWAT, RAMA~WAMI and MITTER, JJ. was delivered by MITTER, J. HEGDE, J. delivered a dissenting Opinion. B c **D** E **G** **H** **Mitter,** **J.** This group of five appeals by special leave arises out of a common order made under Art. 226 of the Constitution of the High Court of Judicature at Madras. The, ~\ppcals involve ti;e .interpretation of s. 35 ( 5) of the Income-tax Act, 1922: The facts in Civil Appe'al No. 2154 of 1966 relevant tor the disposal of the appeal, taken by way of sample, are as follows. 'l he respcndent along with his four brothers were partners ol a registered firm carrying on business in gunnies. Th~ assessment of the firm for the year 1943-44 was completed on January 22, 1946 and the share income of each partner was dct~ralincd at Rs. 8,265 /-. The assessment of !he respondent as individual was completed on January 24, 1946 wherein was included his income from the partnership just noted. Subsequently, the assessment of the firm was re-opened by proceedings under s. 34(1) (a.) of the Act and a sum of Rs. 90,000/- was added to the income of the firm liable to be brought to tax. The notice under s. 34 was issued on' September 11, 1952 and th.: reassessment of the firm took place on May 30, 1959. On July 24. 1959 notice under s. 35(5) of the Act was serve'd on the respgndent for rectification of his assessment as an individual. The rectification was ultimately ordered to be mad-3 on August 31, J 959. The respondent applied to the High Court for quashing the said order., When the matter came to be heard by the High Court of Madras, there were already three reported decisions of this Court bearing on the interpretation of s. 35 ( 5) of the Act. In the faq of these decisions, a doubt had -been cast as to the eorrectness of the two earlier decisions but the High Court felt that the deci;ion in _Second Addi. Income-h•x Officer_ v. _A tmala_ _Nagaraj(1)_ being the second decision cif this Court in point of time. was fully applicable to the cases before it and in that view of the matter the order of rectification was quashed. Hence these :ippe~ls., Before taking note of the earlier deci>ion_; of this Court, it would be appropriate to consider the relevant provisions of the lncome-tax Act and interpret them as if the matter were _res integra._ If the result leads to a conflict of decisions, we will have to ex"mine the question a:; to whether the view taken in an earlier case should be adhered to. It is only when this Court finds itself un abJe to accept the earlier view that it would be justified in decidin,c these appeals in a' different way . (I) 46 LTR, 6:;9. [1968] 2 S.C.R. 36 SUPREME COuRT REPORTS The two sub-section~ of s. 35 which call for interpretation are transcribed as follows : "35. Rectification of mistake.--{!) The Commissioner or Appel1ate Assistant Commissioner may, at any time within four years from the date of any order passed by him in appeal or. in the case of the Commissioner. in revision under section 33A and the Income-tax Officer may, at any time within fo,ur years from the date of any assessment order or refund order passed by him on his own morion rectify any mistake apparent from the record of the appc,1, revision, assessment or refund as the case may be, and shall within the like period rectify any such mistake which has been brought _to_ his notice by an assessce : Provided that no such rectification shall be made, having the effect of enhancing an assessment or ~educ­ ing a refund unless the Commissioner, the Appellate Assistant Commissioner or the Income-tax Officer, as the case m<1y be, has given notice to the assessee of his intention so to do and has allowed him a reasonable opportunity of being heard : A II c D Provided further that no such rectification shall b made of any mistake in any order passed more than one year before the commencement of the Indian Income tax (Amendment) Act, 1939. E (2) to (4) . (5) Where in respect of any completed a.•se-.mcnt of a partner in a firm it is found on the assessment or re-assessment of the firm or on any reduction or r.nhanccment m~de in the income of the firm under section 31, section 33, section 33A, section 33B, section 66 or F section 66A that the ~hare of the partner in the profit or loss of the firm has not been included in the assessment of the partner vr, if included. is not correct, the inclusion of the share in the assessment or the correction thereof, as the case may be, shall be deemed. to be a rectification of a mistake apparent from the record with G in the meaning of this section, and the provisions of subsection (I) shall apply thereto accordingly, the period of four years referred to in that 'uh-section being computed from the date of the final order passed in the case of the firm. (6) to (10) _ " H Section 35(5) was brought on the statute book by the Incom(>.tax F G H ' \Amendment) Act. 1953 (XXVof 1953). Section 1(2) of the Act provided that ' C.I.T. _v._ DEVINATH _(Mitter,!.)_ 37 A "Subject to any special provision made in this behalf in this Act, it shall be deemed to have come into force on the 1st day of April, 1952." The Amendment Act contained provisions which show that som~ of the amendments introduced were to be effective from date; other than 1st April, 1952. Section 19 of the Act of 1953 introduced sub-sections (5), (6) and (7) of s. 35 of the original Act. Under sub-s. ( 1) of s. 35 the Income-tax authorities mentioned therein were empowered to rectify mistakes apparent from the record. Such power could, in the case of an Income-tax Officer, be: exercised at any time within four years from the date of any as<essment order passed by him on his own motion. The section nowcver imposes a limitation in that the mistake must be in the record of the case itself. As a firm and the individuals composing it are separate entities for the purpose of Income-tax Act, they arc assessed separately. Under s. 23(5)(a) of the Act when the assessee is a registered firm and its income has been assessed under sub-s. (!), sub-s. (3) or sub-s. (4) of that section the incometax payable by the firm itself has to be determined and the total income of each partner of the firm including therein his share of the firm's income, profits and gains of the previous year have to be assessed and the sum payable by him on the basis of such assessment has to be determined. Jn as much however as a mistake discovered in the assessment of the firm was not a mistake apparent from the record of assessment of the individual partner. s. 35(1) did not enable the Income-tax Officer to rectify the assessment of the individual partner because of the discovery of the mistake in the assessment of the firm. The judgment of the Andhra Pradesh High Court in _Kanumar/apudi Lakslzminaraya1w_ _Chetty_ v. _First Additional Income-tax Officer, Ne/lore(')_ wherein it was decided that when the mistake discovered in the assessment of the firm was not in the record of the individual partner s. ~5( I) did not authorise the rectification of such mistakes was upheld by this Court in _The Income-tax Officer, Madras v._ _S._ _K._ _Habiballah,_ _Madras(')._ Section 35 (5) removes that difficulty. It expressly provides that where 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 under the provisions of **the** specified sections that the share of the partner in the profit or loss of the firm has not been included in the assessment of the partner or, if included, is not correct, the inclusion of the share in the assessment or the correction thereof will be deemed to be a rectification of a mistake ap parent from the record within the meaning of s. 35 so as to make sub-s. (.1) of s. 35 applicable to the case of a completed assessment of a partner in a firm. Whereas under s. 35(1) rectification is only possible within four years _from_ th!! date of any asSes.smcnt (I) 29 T.T.R. 419. (2) (1962] Supp. 2 S.C.R. 716, **B** c **D** **E** **F** G **H** 38 SUPREME COURT REPORTS [1968] 2 S.C.R. order or refund order passed by the Income-tax Officer, the start- **A** ing point of computation of the period of four years under s. 35(5) is the date of the final order passed in the case of the firm. The point which has been canvassed in this case in favour of the respondent is that as the section was brought on the statute book on the I st April 1952 any mistake anterior to that date cannot be rectified. It was argued that the opening words of the ~cction **rcadi,.,g** '"Where i11 respect of any completed assessment of a partner in a firm., go to show that only assessments completed after the introduction of the provision _i.e._ on !st April 1952 were in the contemplation of the legislature as proper subject for rectification. It was urged that according to the well known canons of construction legislation which impairs an existing right or obligation except as regards matters of procedure, is not to have retrospective operation unless such construction is clear from the terms of the Act itself. This argument was sought to be fortified by a reference to sub-s. (2) of s. I of the Income-tax Amendment Act of 1953 on the ground that the legislature was bringing this provision on the statute book as from an anterior date and consequently no greater retrospcctivity should be given to it. .. The general rule"' as Halsbury puts it ir Vol. 36, (third edition), page 423 : " is that all statutes, other than those "hich arc merely declaratory, or which relate only to matters of procedure or of evidence, arc _prima_ _facic_ prospective; and re~r6spective effect is not to be given to !hem unless, by express words or necessary implication, it appears that this was the inte~tion of the lcgisla••1re." The law was also succinctly stated by Lord Hathcrley, L.C. in _Ptudo_ v. _Bingham(')_ where on the question as to whether a statute operated retrospectively it was said **B** c **D** **E** F "In fact. we m.ist look to the general scope and purview of the statute, and at the remedy sought to be G applied. and consider what was the former state of the law. and what it "'"' that the Lcgisbturc contemplated.'" Applying the uhovc principles. we find that the aim of the **legislation** **\Vas** **to** brin.~ **into line** **the** **asse:-,<.;111cnl** **of** **the** **individu;:tl** purtncr with thut o[ the firm. It was well known that in m~nv cases _u_ firm "s tinul assessment dragged 011 for years while th~ **H** usse;smcnts of the individuals composing oL it were completed **en** **L.R 4** **Ch;!:lt:'.'.':y** **App ...** -;!,-:-_;~. **ii** **c** **D** **E** **p** _**G**_ **H** C.l.T. _V._ DEVINATH _(Miller,_ _J.)_ 39· Jon<> before the assessment of the firm itself because in the case of fi1dividuals 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 proceedin5s 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 s~ould con .inue or be left untouched and the obv10us and log1cal course should be to rectify the assessment of the individual on the basis 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 best that assessments of individuals which had taken place before the final order in the assessm~nt of the firm should not be. disturbed, except within four years therefrom. Under the 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 p;:ovision 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 rectification. The power is to be exercised whenever "it is found on the assess ment or re-assessment of the firm or on any reduction or enhance ment inade in the income of the firm". The subject matter of rectification is the completed assessment of a partner in a firm. This is brought out by the use of me words "where in respect of any completed asssessment of a partner in a firm". There is nothing in the section to show that such "completed assessment" must take place after the provision _i.e._ s. 35 _(_ 5) was brought on the statute book. What is to take place to give rise to the power of rectification is the finding on the assessment or re-assessment of the. finn etc. The finding alone musi be made after section comes into fo•ce. The finding is to be given effect to or made more operative on the "completed assessment" of a partner. As the mischief sought to be rectified was the discrepancy between the income of the partner assessed as an individual and his income as computed on the assessment of the finn, the legislature must be held to. have made the remedy, applicable whenever the mischief was discovered. There would have been nothing unjust in making the power of rectification exercisable at any time after the discovery of the discrepancy but the legislature in its wisdom did not think that the power should be used except ·within a limited period of four years from the date of the final order. This group of appeals has been referred to .a larger Bench than one of the three Judges before whom 'the matter was opened on May 4, 1967 because of the earlier decisions of this Court. We now proceed to examine these decisions chronologically. In _The_ 40 SUPREME COURT REPORTS !1968] ~ S.C.R. _lllcome-tax Officer,_ _M{lf.fras_ v. _S. K. Habib11/lah(')_ the facts were as follows .. One Mohiuddin who was a partner in two registered firms submitted returns of his income incorporating therein the estimated share of losses in the two firms for the assessment years 1946-47 and 1947-48. The estim:aes of the assessec were accepted by the Income-tax Officer who completed the assessment for the two years on February 20, 1950. The assessment of one of the firms for the same years was completed on October 31, _1950_ but the proportionate share of the assessce for the losses was computed at much smaller figures. The asse~sment of the other firm for 1947-48 was completed on June 30, 1951 again for a smaller sum than that estimated by the assessee. The Income-tax Officer started rectification proceedings on t.lay 4, 1953 and ultimately passed an order for rectification on March 27, 1954 after taking into account the share of the losses as computed in the assessment of the two firms. It will be noted at otlce that the finding about the incorrectness of the losse~ of the firm as estimated by the assessce as also the completion of his assessment preceded April I, 1952 and on the view of the section which we have taken it could not be made applicable at all. It was stated in exoress terms by this Court : "The power to rectify as.sessment of a partner consequent upon the assessment of the firm of which he is a partner by including or correcting his share of profit or loss can therefore be ex~rcised only in the case of assessment of the firm made on or after April 1, 1952." The decision in _llabibullah's(_ _[1 ]_ _)_ case therefore in no way con~:.:ts with the view of s. 35(5) which we have taken above. In passing, however, it may be noted that in _Habibullah's(')_ case a·reference was made to sub-s. (6) of s. 35 which was introduced in the statute book by s. 19 of the Amendment Act of 1953 at the same time as sub-s. (5). There are certain words in sub-s. (6) which are not to be found in sub-s. (5) and on a contrast berween the language used in the two sub-sections it was observed in _Habibul/ah's(')_ case: "When the Legislature under cl. (6) of s. 35 expressly authorised rectification in the circumstances mentioned therein even if the assessment has been completed before the Indian Income-tax (Amendment) Act, 1953. and it made no such provision in cl. (5), it would be reasonable to infer that the Legislature did not intend to grant to the revenue autho,~ties a power to rectify as~•­ ments falling within cl. (5) where the firm's assessment was completed before April I, 1952." co (19621 SuPi>· 2 s.c.R..~716, A B c D E F G H C.I.T. v. DEVINATH _(Mitter,_ _J.)_ 41 This reasoning was advanced berore us in aid of the argument that sub-s. (5) should have no retrnspective operation beyond April l, 1952. We do not want to express any view as to the interpretation of sub-s. (6) . but in our opinion, sub-s: (5) was clearly intended to give retrospective effect to final orders made in the case of the firm by incorporation of the result thereof in the case of the partner as an individual. The second decision of this Court is that of _Second Addi._ _Income-tax_ _Officer_ v. _Atma/a Nagaraja(')._ In this case the proceedings related to the assessment of the respondent for ·the a~sess­ ment year 1950-51. The respondent in one of the appeals was assessed as an individual while in the other appeal tne respondent was assessed as a Hindu undivided family. The original assessment was completed in both ca~es on January 22, 1952. Th" two assessees ~eld shares in two registered firms and the share.' from the profits of these firms were included in the assessable ncome of the two respondents. The assessments of the firms were completed by an order dated October 16, 1954 when it wa' 'found that the aggregate shares of income from the two firms in the case of each of the respondents were more than that for what they had been assessed. After starting proceedings under s. 35 an additional demand was made whereupon the respondents moved the. High Court of Andhra Pradesh. After referring to _Habibu//ah's(')_ case and _K._ _Lakshminarayana Chetty's(")_ case it was said: "The assessment of the respondents was a final ru;sessment before April 1, 1952, and sub-section (5) has not been made applicable to such assessment, either expressly or by implication. It has been given a limited retrospectivity from April 1, 1952, and it was held by this court in the cited case that it was not open to courts to give more retrospectivity to it. Resort in this case could only be taken to the law as it stood before the introduction of sub-section (5), and as determined already by this court, the record of the firm's assessment could not then be called in aid to de)nonstrale ·an error on the record of a partner's assessment. . . . In our opinion, sub-section (5) could not be used in this case, and the decision of the High Court was right." With very great respect, we find ourselves unable to concur. As we have already said, sub-s. (5) becomes operative as soon a' 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 ' A II c D F G - H (l} 46 I.T.R. 609., (2) [1%2] Supp. 2 S.C.R. 716. LIOSup.(Cl)/68-4 (3) 29 l.T.R. 419. 42 SUPREME COURT REPORTS [1968) 2 S.C.R. that the sha11: of t~e partner in the profit or loss of the firm had A not been mcludcd m the assessment of the partner or if included was not corrc~t. The completion of the assessment of the partner as an md1v1dual need not happen after April 1, I 952. The rnmplctcd assessment of the partner is the subject matter of rectil!cat.Jon and this may have preceded the above mentioned date. Such Clllllplction docs not control the operation of the sub-section. B In the result, we find ourselves unable to concur in the decision or the reasoning in _Alma/a Nagaraj's(')_ case. The last case in the series is that of _Ahmedabad Manufac!ur-_ _ing 1md Calico Printiug Co._ _Lid._ v. _S._ C. _Mehta(')._ In this case the Court had to consider sub-s. (l 0) of s. 35 which was introduced by s. I 9 of the Finance Act, I 956. The Bench hearing this appeal was composed of five Judges and two of them, S. K. Da~ and J. L. Kapur, JJ., took the view that _Habibu/lah's("')_ case had been correctly decided but that _Atma/a_ _Nagaraj's(')_ case might require re-consideration although they did not express any final opinion on that point. Sarkar, J. (as he then was) did not think that much assistance could be had from _Habibullah"s_ case(") in the matter of interpretation of sub-s. (I 0) of s. 35. He said further : "There is nothing in _S._ _K._ _Habibullah"s(")_ case to indicate that in the opinion of the learned Judges ueciding it there were any words which would incJicate that suo-s. (5) was to have a retrospective operation. In my view, sub-s. (I 0) contains such words." The judgment of the two other Judges. Hidayatullah and Raghubar DJyal, JJ. was delivered by HidJyatullah, J. wlic dealt with the subject of rctro>pectivc opera! ion of statutes elaborately and discussed _llabihul/ah"s_ case(") at some length and expressed the view (at p. 125) that although the section mentioned the final order in the firm's assessment as the starting point "there was nothing tc> show that this new _terminus a_ _quo_ must be after _1-4-_ I 952 before sub-s. ( 5) could be used." According to Hidayatullah. J. "the words of the sub-section were entirely indifferent to this aspect." The learned Judge was however careful to add that this must not be considered as his final opinion on sub-s. _(5)._ Any opinion of Hidayatullah, J. even with the above qualification merits the highest .respect. After giving very amdous consideration to the views expressed by the learned Judge, we still hold that hy sub-s. (5) of s. 35 the legislature intended that rectifica tion should be made on the finding as to the incorrectness of the as~ment of the firm after the provision was introduced in the statute book, _viz.,_ 1·4-1952. There would have been nothing unjust or inequitable in the legislature directing that rectification (I) 46. I.T.R. 609. (2) [1963! Supp. 2 s.c.R. 92. (3) [1962] Supn. 2 S.C.R. 716. c () F G H , ### .. C.I.T. _v._ DEVINATH _(Hegde,_ _!.)_ **A** of the assessment of the partner should always follow the assessment or re-assessment of the firm made finally. On the other •and, we think rectification of the partner's . assessment should logically follow the re-assessment or modification of the firm's assessment. Otherwise, there would be an unaccounted for divergence between a person's assessment as an individual and his B assessment as a partner of a firm. But the legislature, in our opinion, did not intend to disturb completed assessment cif partners except within the period of time indicated earlier in this judgment and unless the finding as to the incorrectness of the firm's assessment was made after the _terminus_ _a_ _quo_ above mentioned. C In the result, the appeals <ire allowed. The judgment and order of the High Court of ·Madras are set aside and the orders of rectifiction passed by the Income-tax Officer are held to be effective and binding on the respondents. In the circumstance~ there will be no order as to the costs of these appeals. **D** E F G **H** **Hegde,** **J.** The respondents in these appeals were the partners of a registered firm carrying on business in gunnies. For the assessment year 1943-44, _i.e.,_ the assessment year ending March 31, 1944, the firm in .. question was assessed to tax on 22-1-46. Two days thereafter, namely on January 24, 1946, the partners of the said firm were also assessed to tax for the assessment year 1943-44 after taking into consid!ration their share of profits in the firm. The Indian Income Tax Act 1922, to be hereinafter referred to as the Act was amended by Act 25 of 1953. The said amending Act among other provisions incorporated s. 35 ( 5) into the Act. Section 1 (2) of that Act provided that "subjecr to any special provision made in this behalf in this Act, it shall be deemed to have come into force on ::he 1st day of April 1952". On September 11, 1952, the ITO issued notice to .the firm under s. 34 of the Act requiring the firm to show cause why its assessment for the assessment year 1943-44 should not be re-opened and enhanced for the reasons mentioned in that notice. In the proceedings that followed the assessment of the firm was substantially enhanced on 30-5-59. Thereafter, the proceedings against the respondents were initiated under s. 35 ( 5) read with s. 35 ( l) as per the notices dated 24-7-59. fo those proceedings the assessment of the respondents for the assessment year 1943-44 was enhanced. The respondents challenged the validity of those proceedings in the High Court of Judicature at Madras in writ petitions 12291233 of 1961 on its file. The High Court following the decisions of this Court in _Income Tax Officer, Madras v._ _S._ _K. Habibullah(_ [1] ) and _Second Additional Income Tax Officer,_ _G11rit11r_ v. _Atma/a_ _Nagaraf and others("),_ allowed those writ petitions and quashed (I) [1962] Supp. 2 s.c.R. 716. (2) 46 l.T.R. 6G9. SUPREME COURT REPORTS [1968]2 s c the impugned orders. foese appeals are directed against the said decision. As the matters now stand, the question of law arising for decision is not _res integra._ It is concluded by the decision of th.is Court in _Atma/a Nagaraj's(1)_ case, wherein this Court laid down that sub-s. _5_ of s. 35 was not applicable to cases where the asseMment of a partner of a firm was completed before April 1, 1952 even though the assessment of the firm was completed after April 1, 1952. Evidently, encouraged by some of the observations in the decision of this Court in _Ahmedabad Mfg._ & _Calico Printing Co.,_ _Ltd._ v. _S.S. Mehta, Income Tax Officer and another('),_ Mr. S. K. Aiyer, learned counsel for the department contended that _Habi-_ _bul/ah's(1)_ case and _Atma/a Nagarafs(')_ case were not correctly decidcJ and that they should be overruled. Though the majority have not acceded to the contention of Mr. S. K. Aiyer that _Habibul/ah's(')_ case has not been correctly decided, it has accepted his contention that _Atma/a Nagarafs(')_ case was not corrxtly decided. As I am unable to concur with that conclusion, I am constrained to deliver this dissenting judgment. In my opinion, no case is made out to overrule the decision of this Court either in _Habibul/ah's(_ _[1 ]_ _)_ casr. or in _Atma/a Nagarafs(')_ case As seen earlier, the assessments in question were made as far back as January 24, 1946. E.fery assessment under the Act is final unless the same is modified in appeal or revision or reopened under s. 34 or rectified under s. 35. The assessment with which we are concerned in this case was neither modified in appeal or revision nor reopened under s. 34. The question for decision is whether it can be rectified under s. 35. A B c D E Under the Act, the assessment of a firm and the assessment of its partners are two different assessments though in assessing a F partner his share in the firm's profits is added to his other income. In fact, the profits of a registered firm are subject to double tax, firstly in the hands of the firm and nextly in the hands of its part nezs. As the law stood prior to the amending Act 25 of 1953, the assessment of a partner could not be rectified under s. 35 ( 1) on the ground that the !inn's assessment had been enhanced as a G result of re-assessment. In other words, the re-assessment of a firm could not be considered as a mistake apparent from the records of the assessment of its partners. That wa~ the view taken by the Andhra Pradesh High Court in _Kanumar/apudi Lakshmi-_ _narayana Chetty_ v. _First Additional Income tax Officer, Ne/·_ _lore_ (4) and ¢.at view was accepted as correct by this Court in H _Habibullah's_ case('). Therefore, all that we have to see is whether , . ###### . (1) 41i I.T.R. 609. (2) [1963) Supp. 2 S.C.R. 92. (31 [1962] Sup. _2_ S.C.R. 716. (4) 29 I.T.R. 419. C.I.T. v. DBVINATH _(Hegde,_ /.) 45 s. 35 ( 5) one of the group of clauses added by Act 25 of 195 3 could have been availed of by the ITO in making the impugned rectifications. Section 35(5); the the extent it is material for our present purpose, reads ~s follows : correction thereof, as the case may be, shall be deemed to be a rectification of a mistake apparent from the record within the meaning of this section, and provisions of sub-sections ( 1) shall apply thereto accordingly, the period of four years referred to in that sub-section being computed from the date of the final order passed in the case of the firm." Section 35 ( 1) empowers the income tax authorities to rectify mis takes apparent from the record of certain orders pasoed by them. The clause (omitting parts not material) provides th;tt the income tax officer may,· any time within the four years from the date of any assessment order passed by him, on his own motion, rectify any mistake apparent from the record of the assessment. As seen earlier, prior to the amending Act 25 of 1953, the ITO could not have made the rectifications with which we are concerned in these appeals. Therefore, the question for decision is whether by the exercise of the powers conferred on him by s. 35 ( 5), the ITO could have validly made the impugned rectifications? it may be noted that in these cases both the assessment of the finn as well as the assessment of its partners were made long before April 1, 1952. But the assessment of the firm was reopened and the firm reassessed after that date. In _Habibul/ah's(')_ case this Court laid down that the legislature had given to cl. 5 of s. 35 which was incorporated with effect from April 1, 1952, a partial retrospective operation. The provision enacted by cl. 5 is not procedural in character. It affects the vested rights of the assessee. Therefore in the absence of compelling reasons, the court would not be justified in giving a greater retrospectivity to that provision than is warranted by the plain words used by the legislature. Cl. 5 of s. 35 does not purport to amend cl. 1 of the same section. It confers additional powers upon the income tax authorities and that power cannot be exercised in respect of assessment of a firm which had been completed before the date on which the power. had. been invested. This Court quoted with approval (I) [1962]Supp. 2 S.C.R. 716. A B c D E F G "Where in respect of any completed assessment of a partner in a finn, it is found on the assessment or reassessment of a finn .... that the share of the partner in the profit or loss of the firm has not been included in the assessment of the partner, or, if included, is not correct, the inclusion of the share' of the assessment or the H 46 SUPREME COURT REPORTS [1968] 2 S.C.R. the observations of the Privy Council in _lncon:ie_ _0Tax_ _Commis-_ A _sioner_ v. _Kfzemchand Ramdas(_ [1] ) : "When once a final asses~ment is arrived at, it cannot, in their Lordships' opinion, be reopened except in the circ~mstances detailed in sections 34 and 35 of the Act .... and within the time limited by those sections." B From this decision the correctness of which is not doubted by the majority, it follows that s. 35 ( 5) is only retrospective as from April I, 1952; it has no greater retrospectivity and that section cannot affect vested rights. No doubt that decision was dealing with the assessment of a firm, but the ratio of that decision, in my opinion, applies with equal force to the assessment of a partner. C If the assessment of a firm made before April l, 1952 cannot be:. reopened under s. 35(1) read with s. 35(5), the same must be equally true of the assessment of a partner uf a firm. The ratio of the decision in _Habibullah's(2)_ case is that qghts which have become final prior to April 1, 1952 cannot be affected by having recourse to s. · 35 ( 5). D By applying the ratio of the decision in _Habibul!ah's(')_ case. this Court held i:i. _Atma/a Nagaraj's(_ _[3 ]_ _)_ case that sub-s. _5_ of s. 35 was not applicable to cases where the assessment of a partner wa' completed before April l, 1952 even though the assessment of the firm of which he was the partner wa.' completed after April I, 1952. At p. 612 of the report, this is what this Court observed E in _Atma/a_ _Nagaraj's(')_ case : "Here, the original assessment wa, made before the amendment. and to that assessment the amended provision cannot still be made applicable for the reason to be given by us, even though the assessments of the firms were after April I, 1952, and sub-section ( 5) has not been made applicable to such assessment, either expressly or by implication. It has been given a limited retrospectivity from April I, 1952, and it was held by this court in the cited case that it was not open to courts to give more retrospectivity to it. Resort in this case could only be taken to the law as it stood before the introduction of sub-section ( 5), and as determined already by this Court, the record of the firm's assessment could not then be called in aid to demonstrate an error on the record of a partner's assessment. It was further held in _S. K. Habibullah's(_ _[2 ]_ _)_ case that the provision enacted by sub-section _(5)_ is not procedural in character and that it affect~ vested rights of an assessee. In our (I) 65 I.A. 218. (2) [t 962) Supp. 2 s.c.R. 716. (3) 46 l.T.R. 609. F G II '' 47 A B ' c D •· E F G H It may be noted that both the decisions in _Habibullah's_ case(') and _Atmala Nagaraj's_ case(") were rendered by the same Bench (consisting S. K. Das, Hidayatullah and Shah, JJ.) I am unable to accept the contention that _Atmala Nagaraj's_ case(2) laid down any new legal principle. It merely applied the principle laid down in _Habibullah's_ case(') to the facts of that case. Iu my opinion there is HO legal basis to distinguish the one from the other. In _Ahmedabad Manufacturing and Calico Ptg., Co.,_ case( [3] ), this Court was called upon to interpret the scope of sub-s. 10 of s. 35 of the Act which was brought into force on April 1, 1956. The language of that provision is wholly different from that of s. 35 ( 5). It is not clear. from the report why in that case _it_ became necessary to consider the correctness of the decisions of this Court in _Habibullah's_ case('! and _Atmala Nagaraj's(")_ case. But it appears that in the course of the argument£ the correctness of those decisions was put into issue. Three separate judgments were delivered in that case, one on behalf of ~. K. Das and Kapur, JJ, by Das, J. another on behalf of Hidayatu!lah and Raghubar Dayal, JJ. by Hidayatullah J, and the third by Sarkar, J. Sarkar, J, in his judgment, merely referred to _Habibullah's_ case(') and not to _Atmala Nagaraj's(_ _[2 ]_ _)_ case. Dealing with _Habibul/ah's_ case('), this is what his. Lordship observed : "As to S. _K. Hablbullah's_ case(') I do not think that much assistance can be had from it. It applied the rule of presumption against a statute having a retrospective operation-as to which rule, c;>f course, there is no dispute-to sub-s. (5) of s. 35. Now cases on the construction of one statnte are rarely of value in construing another statute, for each case turns on the language with which it is concerned and statutes are not often expressed in the same language. The language used in sub-ss. ( 5) and (IO) seems to me to be wholly different. There is nothing in S. _K. Habibullah's_ 'case(') to indicate that in the opinion of the the learned Judges deciding it there were any worqs which would indicate that sub-s. ( 5) was to have a retrospective operation. In my view, sub-s. (10) contains such words. Furthermore, I do not find that the other considerations to which I have referred arose for discussion ·iri that case. In my view, the two cases are entirely different." (I) [1962] Supp. 2 s.c.R. 716. (2) 46 I.T.R. 609 . (3) [1963] Supp. 2 s.c.R. 92: C.I.T. _v._ DEVINATH _(Hegde,_ _J.)_ opinion, sub-section ( 5) could not be used in this case, and the decision of the High Court was right." 48 SUPREME COURT REPORTS [1968] 2 S.C.R. Das, J. accepted the correctness of the decision in _Habibu//ah's_ A case(') but while dealing with _Atma/a Nagaraj's_ case(') he observed : "We may point out, however, that in _Second Addi-_ _tional Income tax Officer_ v. _Atma/a Nagaraj(')_ this court went a step further and held that sub-s. ( 5) of s. 35 was not applicable to cases where the assessment B of the partner was completed before April I, 1952, even though the assessment of the firm ·was completed after April 1, 1952.- Learned counsel for the appellant frankly conceded before us tha~ he did not wish to go as far as that and contend that even in a case where a declaration of dividend was made after April 1. 1956, C sub-s. (10) would not apply; because $it would makr sub-s. (10) unworkable.' The decision is _Second_ _Additiornil Income Tax Officer_ _v._ _Atma/a Nagaraj(')_ may perhaps require reconsideration as to which we need not express any final opinion now, but so far as this case is concerned we see no reason why the. principle D in _S._ _K._ _Habibu/lah's_ case( [1] ) will not apply." But Hidayatullah, J. who as mentioned earlier was a party to both the decisions dealing with those decisions observed : . #### . "We do not naturally express a final opinion on sub-s. (5). We must leave that to a future case. We must, however, say that the two earlier cases may have to be reconsidered on some future occasion." For the reasons to be presently stated I would rather prefer to follow the decisions in _Habibu//ah's_ case(') and _Atma/a Nagarafs_ case( [2 ] ) which I am sure must have been rendered after deep consideration rather than the passing doubts hesitatingly expressed by two of the learned Judges who were parties to those decisions. As seen earlier, even the majority has not shared the doubts expressed by Hidayatullah, J. as regards correctness of the decision in _Habibu//ah's_ case('). The rule laid down in Habibu//ah'~( 1 ) and _Atma/a_ _Nagaraj's(")_ cases is a well settled rule. Dealing with the interpretation of taxing statutes, it is observed in Halsb_u_ry's Laws of England (Vol. 36, pp. 416-17): "The language of a statute imposing a tax, duty or charge must receive a strict construction in the sense that there is no room for any intendment, and regard must be had to the clear meaning of the words. If the Crown claims a duty under a statute, it must show that that duty is imposed by clear and unambiguous words, and where the meaning of the statute is in doubt, it must (I) (19b21 Supp. 2 S.C.R~716:- (2) 461.T.R 6~9. J1 G H 49 Rowlatt, J. observed in _Cape Brandy Syndicate_ v. _Inland Revenue_ _Commissioners(')_ : "fn a taxing Act one has to look merely at what is clearly said. There is no room for any intendme!!t. There is no equity about a tax. There is no pre~ump­ tion as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." These principles have been accepted as correct, both by the English Courts and the superior courts in this country. It is now well settled that if the interpretation of a fiscal enactment is in doubt, the construction most beneficial to the subject should be adopted even if it results in obtaining an advantage to the subject; the subject cannot be taxed unless he comes within the letter of the law and the argument that he falls within the spirit of the law cannot avail the department. In _Commissioner of Income tax, Bombay_ v. _Provident Invest-_ _mel1t_ _Co.,_ _Ltd.("),_ this Court quoted with approval the following passage from an earlier decision of this Court in _A._ _V._ _Fernandez_ v. _State_ _of Kera/a_ (') : "If the Revenue satisfies the Court that the case falls strictly within the provisions of the Jaw, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter. We must of necessity, therefore, have regard to the actual provisions of the Act and the rules made there (l) [1921] l K.B. 64. (2) 32 I.T.R. 190. (3) 8 S.T.C. 561. C.I.T. _v._ DEVINATH _(Hegde,_ J.) be construed in favour of the subject, however, much within the spirit of the law the case might otherwise appear to be; but a fair and reasonable consn;iction must be given to the language used without learung to one side or the oth~r. The rule that the literal construction of a statute must be adhered to, unless the context renders it plain that such a construction cannot be put on the words, is especially important in cases of statutes which impose taxation. There is no rule admitting equitable construction of a taxing statute; tliat is to say cases which are not within the actual words of the statute cannot be brought within the statute by consideration of its governing principle or intention." •· A B c D E I' G H 50 SUPREME COURT REPORTS [1968) 2 S.C.R. under before we can come to the conclusion that the appellant was liable to assessment as contended by the Sales Tax authorities." In _Commissioner_ _of_ _Income tax,_ _Bombay_ v. _Elphinstonc_ _Spinning and_ Wea~·ing _Mills Co.,_ _Ltd.('),_ this Court held that if the words of the taxing statute fail, then so must the tax. The courts cannot, except rarely and in clear cases, help the draftsmen by a favourable construction. In _Commissioner_ _of_ _Income tax, Bombay_ v. _Jalgavn Electric_ _Supply Co.,_ _Ltd("),_ this Court again observed: "The income tax law seeks to bring within the net of taxation certain class of income, and can only successfully do so if it frames a provision appropriate to that end. If the law fails and the tax payer cannot be brought within its letter, no question of unjustness as such arises." In _Banarsi Debi and another_ v. _Income tax O!]icrr,_ _Ca/-_ _cu/fa, and others(_ _[3]_ _),_ it was observed: '"Before construing the section it will be useful to notice the relevant rules of construction of a fiscal statute. In _Oriental Bank Corporation_ v. _Wrigh)_ (5 A.C. 842) the Judicial Committee held that if a statute professed to impose a charge, the intention to impose a charge on the subject must be shown by clear and unambiguous lan guage. In _Canadian Eagle Oil Co._ v. _R._ [19461 A.C. 119, Viscount Simon L.C. observed :, 'In the words of Rowlatt. J ..... in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in. Nothing is to be implied. One can only look fairly at tne language used." In other words, a taxing statute must be couched in axpress and unambiguous language. The same rule of construction has been accepted by this court in _Gursahai Saigal_ v. _Commissioner_ _of_ _Income tax_ ( 48 l.T.R. I) wherein it was stated: ' .... it is well rccogr.'scd that the rule of construction that if a ca~e is not covered within the four corners of the provisions of a taxing statute no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance (I) 40 1.T.R. 142. (2) 40 1.T.R. 184. (3) ~3 l.T.11.. 100, 104. A B c D •. E F G H C.I.T. _v .._ DEVINATH _(Hegde,_ ].) 51 of the matter, applies only to a taxing provision and _has no application to all provisions in a taxing statute':' In _Commissioner_ _of_ _Income_ _tax,_ _Madras_ v. _Ajax_ _Products_ _Ltd._ ( [1 ] ) this Court quoted with approval the rule laid down by Rowlatt, J. in _Cape Brandy Syndicate_ case(") to which reference has already been made. It went further and observed : "To put in other words, the subject is not to be ~ed unless the charging provision clearly imposes the obhga tion. Equally important is the rule of cons,!fllction that if the words of a statute are precise and unambiguous, they must be accepted as declaring the express intention of the legislature." From the foregoing decisions it is clear that the consideration whether a levy is just or unjust, whether it is equitable or not, a consideration which appears to have greatly weighed with the majority, is wholly irrelevant in considering the validity of a levy. The courts have repeatedly observed that there is no equity in a tax. The observations of Lord Hatherley. L.C. in _Pardo_ v. _Bingham(")_ "In fact we must look to the general scope and purview of the statute, and at the remedy sought to be applied, and consider what was the former state of the law, and what it was that the Legislature contemplated", were made while construing a non-taxing statute. The said rule has only a limited .application in the interpretation of a taxing statute. Further, as observed by that learned Judge in that very case the question in each case is "whether the legislature had sufficiently expressed its intention" on the point in issue. I do not think that· the impugned assessments can be said to be just or equitable even if that consideration is at all relevant. The assessments of partners of firms, whose assessments had become final before April 1. 1952 cannot be reopened. There is no just or equitable ground to differentiate the case of the respondents from those assessees. As seen earlier, the assessment of the respondents had· become final as far back as 1946. Thev would have arranged their affairs on that basis. - Thirteen year'., thereafter, they were called upon to pay additional tax. It cannot be said that that is just or equitable. This takes me to the question whether the impugned assessments come clearly within the scope of s. 35(5). That is the only relevant consideration. But before going into that question we must remind ourselves that the assessments of the respondent' had become final in the year 1946 and under the law as it stood prior to the enactment of s. 35 ( 5), those assessments could not (I) _55_ l.T.R. 741..[1965] I S.C.R. 7J1 (1) [1921] I. K.B. 6-1. \3) 4 Ch. Appeals 735. _>_ A B c D #####, G II ## . 52 SUPREME COURT REPORTS [1968] 2 S.C.R h.aye ~n interfered.with. Section 35(5) unlike several other pro- A \ls1ons m .the amendmg Act of 1953 had been given only a partial retrospective effect. It 1s made to be operative a> from April I, 1952. In this background let us now proceed to examine s. 35(5). Before a case can be hel<l to fall within the scope of s. 35(5), B two requirements must be satisfie<l, namely, ( 1) that the assessment or rea,sessment of . the lirm must have taken place on or after April I, 1952, and ( 2) the assessment of the partner must be a "completed assessment'". The next question to be decided is whether the "completed assessment'' referred to ins. 35(5) includes an assessment which had become final prior to April I, 1952. c I am unable to find out how the firm's assessment could have hecn validly reopened under s. 34, in September 1952. By the time the notice under s. 34 was issued, the eight years' period of limitation prescribed ins. 34 had expired. But the validity of the lirrn's re-assessment does not appear to have been challenged at any time before the hearing cf these appeals. Hence it is not safe t0 pursue ;hat question. The concept of a "completed assessment" was introduced for the first time by the amen.'.;ng Act 25 of 1952. The Act as it stood till then only spoke of assessment;;, re-assessments and rectification of assessments. What did the legislature mean by saying "completed :Lssessment" ins. 35(5)? That expression is not defin D E ed in the Act. The legislature must be considered to have deliberatcly llscd that expression in place of the expression "assessment" an expression familiar to courts and the connotation of which is well settled. On tbe basis of well recognised canons of construction of statutes we must give that expression a meaning . F 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 cOnsi<lered as a final assessment till the assessment of the firm becomes lioal. In other words, the partner's assessment would continue to G be tentative till the company"s assessment becomes final. If that be the true interpretation of the expression "completed assessmcmt", as I think it is, then that expression can only appty to assessments of partners made on or after April I, 1952. The respondents' assessments as mentioned earlier had become final prior to tl1at date. Hence the respondents' assessments cannot be H considered as "completed assessments" within the meaning of that word in s. '.15 ( 5). Consequently those assessments must be held to be outside the scope of that section. G H C.I.T. _v._ DEVINATH _(Hegde,_ /.) 53 Section 35 ( 5) neither expressly nor by necessary implication empowers the I.T.0. 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 s .. 35 ( 6) and in several other provisions in the amending Act,-ss.3(2), 7(2) and 30(2) of that Act. Further, ifs. 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 s. 35(5) could not have been exerc~ to rectify the assessments in question. From the foregoing it follows that the decision of this Court in _Atma/a Nagarafs_ case(') is correct. Even asswning thats. 35(5) can receive a different interpretation and that interpretation is more reasonable than that,~dopted-by this Court in _Atma/a Nagarafs_ case( [1] ), in that even also this Court would not be justified in overruling its previous decision, which has the force of law in view of Art. 141 of the Constitution. I am of the opinion that the decisions of this Court should not be overruled except under compelling circumstances. It is only when this Court is fully convinced that public interest of a substantial character would be jeopardized by a previous decision of this Court, thiio Court should overrule that decision. Every time this Court overrules its previous decisi-On, the confidence of the public in the soundness of the decision of this Court is bound to be shaken. 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 it~ previous decisions only when it comes to the conclusion that it is manifestly wrong, not upon a mere suggestion that some or all of the members of the later Court might arrive at a different conclusion if the matter was _res integra._ In _Bengal Immunity_ _Co._ _Ltd._ v. _The State_ _of_ _Bihar and others("),_ 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): ' "It is needless for us to say that we shoud not lightly dissent from a previous pronouncement of this Court. Our power of.review, which undoubtedly exists, must be exercised with due care and caution and only for advancing the public well being in the light of the surrounding (IJ 46 I.T.R. 609. (2) [1955) 2 S.C.R. 603. /> A B c D E G H # . 54 SUPREME COURT RBPORTS [1968] 2 >.C.R. circumstances of each case brought to our notice·but we do not consider it r!ght to confine our power within rigidly fixed limit~ as suggested before us." The question of law with which we arc 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 re-assessment of the concerned firms on or after April I, 1952. Such cases are not likely to be many. For the reasons mentioned above, I dismiss these appeals with costs. B c I ORDER In accordance with the opinion of the majority the appeals,are allowed, the judgment and order of the High Court of Madras are set aside and the orders of rectification passed by the Income tax Officer are held to be effective and binding on the respondents. In the circu1mtanccs there will be no order as to costs of these D appeals. G.C.