Reassessment as fresh assessment: once reopened, escaped income beyond the triggering item can be included in tax assessment.

A valid reassessment under section 34(1)(a) of the Indian Income-tax Act, 1922 operates as a fresh assessment proceeding, not a limited inquiry confined to the item that first triggered reopening. Once reopened, the Income-tax Officer may proceed de novo and assess all income that had escaped assessment, because the assessee remains bound to disclose the whole of total income. The court rejected any distinction that would confine reassessment to the particular escaped item identified at the reopening stage, and held that the impugned share income was validly includible in the reopened assessment.

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Issues: Whether, after a valid reopening of assessment under section 34(1)(a) of the Indian Income-tax Act, 1922, the reassessment is confined only to the item which triggered the reopening, or whether the Income-tax Officer may assess all income that had escaped assessment.

Analysis: Once proceedings are validly reopened under section 34, the reassessment is to be conducted de novo and the Income-tax Officer proceeds as in the original assessment by issuing notice under section 22(2). The assessee is under a duty to disclose the entirety of his total income, and there is no warrant for splitting escaped income into categories depending on whether the reopening was initiated under clause (a) or clause (b). The reopening provisions contemplate a fresh assessment of all income that has escaped assessment, and not merely the particular item that led to the reassessment notice.

Conclusion: The reassessment was not restricted to the item first discovered to have escaped assessment, and the impugned share income was validly includible in the reopened assessment.

Final Conclusion: The reference was answered in favour of the department, holding that a valid reassessment under section 34(1)(a) permits inclusion of all escaped income in the reassessment.

Ratio Decidendi: A reassessment lawfully initiated for escaped income is a fresh assessment proceeding, and once reopened, the tax authority may assess all income that escaped assessment, not merely the item that prompted reopening.

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