Reassessment for escaped income upheld where later scrutiny disclosed dividend income wrongly attributed to a different assessment year.

A reassessment under section 34(1)(b) was supported where scrutiny of a later year's return revealed that dividend income had been shown on a receipt basis though it related to an earlier assessment year. On the facts recorded, the Income-tax Officer did not have that information when the original assessment was made. The later discovery of escaped income supplied the basis for reopening, so the challenge to the proceedings failed.

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Issues: Whether the proceedings initiated under section 34(1)(b) were valid.

Analysis: The assessment was reopened after the Income-tax Officer scrutinised the return for a later year and discovered that dividend income had been shown on a receipt basis although it related to an earlier assessment year. On the facts found, the officer did not have that information at the time of the original assessment. The subsequent discovery of escaped income supplied the necessary basis for action under section 34(1)(b).

Conclusion: The reopening proceedings under section 34(1)(b) were valid and the objection failed.

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