Reassessment scope beyond recorded reasons required merits review of prior period expense disallowance.

Once reassessment is validly reopened, the scope of proceedings is not confined to the recorded reasons alone and the Assessing Officer may examine escaped income on other grounds. On that principle, the Tribunal could not treat the Revenue's challenge to disallowance of prior period expenses as infructuous merely because reopening on that specific ground was invalid; it was required to decide the disallowance on merits. The Tribunal's refusal to adjudicate that ground was therefore erroneous, and the matter was directed to be considered on merits in favour of the Revenue.

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Issues: Whether, after reassessment was validly reopened on other grounds, the Tribunal was right in treating the Revenue's challenge to the disallowance of prior period expenses as infructuous and declining to decide that issue on merits.

Analysis: Once reassessment is validly initiated, the jurisdiction in reassessment is not confined to the specific reason recorded for reopening. The assessment proceedings reopen afresh and the Assessing Officer may examine escaped income beyond the original ground for reopening. Applying that principle, the validity of reopening on the other two grounds meant that the Revenue's objection to the prior period expenses could not be ignored merely because reopening on that particular ground was held invalid. The Tribunal was therefore required to adjudicate the merits of the disallowance.

Conclusion: The issue is decided in favour of the Revenue. The Tribunal erred in not deciding the merits of the prior period expenses and was directed to consider that ground on merits.

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