Reassessment limited to escaped income; no credit for separate over-assessment unless the item was wrongly assessed under another head.

Section 34 of the Income-tax Act, 1922 confines reassessment to income that has actually escaped assessment. It does not allow an assessee to reopen the entire original assessment or claim credit against a different head merely because one item was over-assessed. Where an item was in fact under-assessed, that under-assessed amount is properly treated as escaped income and may be brought to tax. A separate over-assessment under another head does not justify set-off or adjustment unless the escaped item was truly assessed under the wrong head. The reassessment was therefore valid only to the extent of the escaped income, and no credit was available for the alleged over-assessment.

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Issues: Whether, on reassessment under Section 34 of the Income-tax Act, 1922, the Income Tax Officer could bring to tax only income that had actually escaped assessment, and whether the assessee could claim credit for an item said to have been over-assessed in the original assessment.

Analysis: Section 34 authorises reassessment only of income that has escaped assessment. The assessee cannot use reassessment proceedings to reopen the whole original assessment or to secure a reduction on some other head merely because a separate item was over-assessed. Where specific items were in fact under-assessed, that under-assessed portion constitutes income that escaped assessment. A separate over-assessment under another head does not entitle the assessee to set off or credit unless it is shown that the escaped item was in truth assessed under an inappropriate head.

Conclusion: The reassessment confined to the items that had escaped assessment was valid, and the assessee was not entitled to credit for the alleged over-assessment under another head.

Ratio Decidendi: Reassessment under Section 34 of the Income-tax Act, 1922 is limited to income that has escaped assessment, and it does not permit an assessee to reopen the entire assessment or claim adjustment for over-assessment of a separate item.

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