TMI Blog1989 (9) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... reassessment proceedings under section 147(a) of the Income-tax Act, 1961, to recompute the assessable income of the assessee at 'nil' and thereby disentitle it to the income-tax rebate when, in the original assessment, the assessable income had been computed at Rs. 1,24,929 and on that basis it has been held entitled to the income-tax rebate under section 2(5)(i) of the Finance (No. 2) Act, 1962, and such assessment had become final as both the assessee and the Income-tax Department had taken no further proceedings from the Tribunal's order to that effect ?" When the reference came up before a Division Bench of this court to which one of us (Justice Bharucha) was a party, it was submitted that in view of the Supreme Court decisions in CST v. H. M. Esufali H. M. Abdulali. [1973] 90 ITR 271, and Deputy Commissioner of Commercial Taxes v. H. R. Sri Ramulu [1977] 39 STC 177, and the Full Bench decision of the Andhra Pradesh High Court, in CWT v. Subakaran Gangabhishan [1980] 121 ITR 69, the decision of this court in New Kaiser-I-Hind Spg. and Wvg. Co. Ltd. v. CIT [1977] 107 ITR 760 (Bom), required reconsideration. Being prima facie of the view that the said decision required recons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed to the assessee during the original assessment proceedings inasmuch as terminal adjustment had not been made in regard to initial depreciation allowed in the earlier years. The Income-tax Officer reopened the assessment proceedings under section 147(a) of the Income-tax Act, 1961, and issued and served a notice under section 148 on the assessee.In response thereto, the assessee filed revised depreciation statement and the reassessment was completed by reducing the assessee's claim for depreciation and development rebate to the extent of Rs. 70,282 and Rs. 14,648, respectively. The total income was thus computed at Rs. 6,63,727 (Rs. 5,28,798 as business income and Rs. 1,24,929 as income from property and other sources) as against Rs. 5,68,797 in the original assessment. The Income-tax Officer, however, took the view that unabsorbed depreciation of the earlier years was to be set off not only against business income but also against other income. Accordingly, as against computing the assessee's taxable income computed at Rs. 1,24,929 originally, the taxable income on reassessment was computed at nil. As a natural corollary, the assessee was not entitled to relief under section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of a case under section 147(a) or section 147(b), the jurisdiction of the Income-tax Officer was to include all escaped income falling under either or both of the sub-sections and not confined to the escaped income falling under the sub-section under which the proceedings were reopened. He pointed out that the scope of a reassessment was to rope in escaped income and if it was taken to be as wide as proposed by Shri Jetley, a number of anomalous situations would arise, such as that the total income computed in the reassessment might fall below the taxable income computed in the assessment; while the Income-tax Officer might only include escaped income and start with the total income computed in the original assessment, the original assessment having been treated as non est, appeal revision, reference arising out of the original assessment might abate and a startling situation might arise ; and the assessee might claim deductions for the first time in the reassessment and might also claim such deductions as were rejected in the original proceedings and the rejections had become final. In order to appreciate the rival contentions, it is desirable to refer to this court's judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclose the totality of his income. The question that falls to be decided on the language of these two sections is whether after notice is issued under section 34(1)(a), the assessment should be limited to items which escaped assessment by reason of the failure on the part of the assessee to disclose all his income, profits or gains which are subject to tax. The Contention of learned counsel for the assessee is that having regard to the terms of clause (b), it was not within the powers of the Income-tax Officer to bring to charge such of the items as have escaped from being taxed without any remissness on his part. It is only items that escaped assessment due to omission or failure of the assessee that come within the range and sweep of section 34, continues learned counsel for the assessee. We do not think that we can accede to this proposition. When once the assessment is reopened, no distinction could be made between items failing under clause (a) and those coming within the pale of clause (b) As pointed out by a Division Bench of this court in R. C. No. 12 of 1969 (Parimisetti Seetharamamma v. CIT [1963] 50 ITR 450), to which one of us was a party (p. 460) : ". . . when once a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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