THE INCOME TAX OFFICER, MADRAS vs S. K.HABIBULLAH, MADRAS

The Supreme Court held that Section 35(1) of the Income Tax Act, 1922 empowers Income Tax Authorities to rectify mistakes apparent from the record, but does not authorize rectification of assessments completed prior to April 1, 1952. The Court established that an individual and a firm are distinct entities for assessment purposes, and mistakes in a firm's assessment do not constitute mistakes in an individual partner's assessment. The Court upheld the High Court's decision to quash the rectification order, affirming that Clause (5) of Section 35 does not retroactively apply to assessments finalized before its enactment.