Reassessment cannot reopen final assessment issues, but an appeal lies when the reassessment departs from the original order.

Proceedings for reassessment under section 34 cannot ordinarily be used to reopen matters concluded by an unappealed original assessment, because the original order becomes final and conclusive. On the facts, the assessee was not attempting to reopen a concluded item; the complaint was that the reassessment ignored the original order's qualifying direction that the business income was subject to adjustment. Since the reassessment departed from and failed to give effect to the final assessment order, the appeal to the Appellate Assistant Commissioner was competent and the referred question was answered in the affirmative.

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Issues: Whether, in an appeal against reassessment under section 34 read with section 23(3) of the Income-tax Act, an assessee can challenge a matter concluded by the original assessment; and whether, on the facts, the assessee's appeal to the Appellate Assistant Commissioner was competent.

Analysis: An assessment order that has not been appealed against becomes final and conclusive, and matters that could have been raised in appeal against that order cannot ordinarily be reopened in proceedings under section 34. On the facts, however, the assessee was not seeking to reopen a concluded item in the original assessment. The grievance was that the Income-tax Officer, while making reassessment, ignored the qualifying direction in the original order that the business income of Rs. 1,11,271 was subject to adjustment. The reassessment thus departed from the final original order instead of giving effect to it, and the appeal before the Appellate Assistant Commissioner was directed against that erroneous action under section 34.

Conclusion: The appeal to the Appellate Assistant Commissioner was competent, and the answer to the referred question was in the affirmative.

Ratio Decidendi: Proceedings for reassessment under section 34 cannot be used to reopen matters concluded by an unappealed original assessment, but an appeal lies where the reassessment order departs from or fails to give effect to the final original assessment order.

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