Reassessment limits under income tax law bar reopening merely because a retrospective amendment reduces statutory interest liability.

Section 34 of the Income-tax Act, 1922 could not be invoked to recover excess statutory interest paid to the assessee under section 18A(5) after a retrospective amendment. The Court held that reassessment is confined to cases of escaped income, under-assessment, assessment at too low a rate, or excessive relief in computing income, and the disputed interest did not fall within any of those categories. The original payment was valid under the law then in force, and the later amendment did not convert it into income under-assessment or excessive relief. The reassessment notice was therefore invalid and the assessee succeeded.

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Issues: Whether reassessment under section 34 of the Income-tax Act, 1922 could be invoked to recover excess interest paid to the assessee under section 18A(5) after a retrospective amendment to that provision.

Analysis: Section 34 permitted reopening only where income had escaped assessment, been under-assessed, assessed at too low a rate, or become the subject of excessive relief. The amount in question was not part of an under-assessment of income; it was interest payable by the Government on advance tax, calculated under the law as it stood at the time of the original assessment. The later retrospective amendment reduced the liability, but the earlier payment did not become an excessive relief granted in computing income. The Court also rejected the contention that the demand form or the provisions dealing with tax paid by an assessee treated such Government-paid interest as tax for the purpose of section 34.

Conclusion: Reassessment under section 34 was not permissible on these facts, and the assessee succeeded.

Ratio Decidendi: Section 34 cannot be used to reopen an assessment merely because a retrospective amendment later reduces the Government's liability to pay statutory interest, where the original computation was valid under the law then in force and the case does not involve under-assessment or excessive relief in the assessment of income.

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