Reassessment and agricultural income accounting must follow the assessee's regular method, with fresh examination required before altering assessment.

Reassessment under Section 41 was treated as timely when read against the assessment year, and the challenge based on limitation and change of opinion was rejected because escaped income could be reopened even on the same materials. Agricultural income had to be computed using the method of accounting regularly employed by the assessee, and the record showed a consistent hybrid method for coffee income that was not properly examined by the reassessing authority. The reassessment order was therefore quashed and the matter remitted for fresh consideration with an opportunity to adduce further evidence.

---

---

Issues: (i) Whether the writ petition was not maintainable in view of the statutory appeal remedy; (ii) whether the reassessment notice was barred by limitation and whether reassessment could be founded on the same materials amounting to a mere change of opinion; (iii) whether the assessee had been regularly following a hybrid system of accounting which had to be accepted for computing agricultural income, and whether the reassessment order required fresh consideration.

Issue (i): Whether the writ petition was not maintainable in view of the statutory appeal remedy.

Analysis: Though an appeal was available under the Act, the writ petition had been admitted and remained pending for several years. In those circumstances, the Court declined to reject the petition solely on the ground of availability of an alternate remedy.

Conclusion: The objection to maintainability was rejected.

Issue (ii): Whether the reassessment notice was barred by limitation and whether reassessment could be founded on the same materials amounting to a mere change of opinion.

Analysis: The Court construed the expressions used in Section 41 with reference to the charging provision and the definitions of assessment year and previous year, and held that the relevant period under Section 41(2) was to be understood in relation to the assessment year. On that basis, the notice was found to be within time. The Court also held that the reopening power could be invoked where income had escaped assessment, even if the reassessment proceeded on the basis of the same materials and even if the earlier view was being revisited.

Conclusion: The limitation challenge and the plea based on change of opinion were rejected.

Issue (iii): Whether the assessee had been regularly following a hybrid system of accounting which had to be accepted for computing agricultural income, and whether the reassessment order required fresh consideration.

Analysis: The Court held that agricultural income had to be computed in accordance with the method of accounting regularly employed by the assessee. On the materials produced, the assessee had shown a consistent hybrid method in relation to coffee income, and the earlier assessment records did not justify ignoring that method merely because the orders described it as cash or mercantile. The reassessing authority had not independently examined the profit and loss accounts and the consistent accounting pattern adopted by the assessee.

Conclusion: The reassessment order was quashed and the matter was directed to be reconsidered afresh in accordance with law.

Final Conclusion: The writ petition succeeded in part: the reassessment was set aside, the revenue was directed to undertake fresh assessment after considering the assessee's accounting method, and the assessee was granted an opportunity to adduce further evidence.

Ratio Decidendi: Reassessment can proceed where income has escaped assessment, but the assessing authority must compute agricultural income in accordance with the method of accounting regularly employed by the assessee and must independently examine that method before altering the completed assessment.

---