Reassessment confined to escaped income; taxpayer cannot reopen unrelated over-assessed heads in the same proceedings.

Section 34 authorises reassessment only of income that has escaped assessment or been assessed too low, and the reassessing authority's jurisdiction is confined to that escaped income. An assessee may resist reassessment by showing that the alleged escaped income was in fact already assessed, but once escapement is established, the assessee cannot use those proceedings to reopen unrelated heads of income or challenge an original over-assessment elsewhere. The reassessment could therefore proceed in respect of the escaped income, and the objection based on over-assessment of other heads was rejected.

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Issues: Whether, when an assessment made under Section 23(4) is reopened under Section 34 because income from specified heads was assessed too low, the assessee can show that income under other heads was originally over-assessed and that such over-assessment was unwarranted by law.

Analysis: Section 34 is directed to income, profits or gains that have escaped assessment or have been assessed at too low a rate. Its scope is confined to the escaped income for which notice is issued, and the officer's function is to assess or reassess that income. The provision does not confer a general right on the assessee to reopen unrelated heads of income or to challenge the whole assessment merely because one head was under-assessed. An assessee may, for the purpose of resisting reassessment, show that the income alleged to have escaped assessment did not in truth escape assessment, but once escape from assessment is established, the assessee cannot defeat proceedings under Section 34 by alleging that some other income was over-assessed.

Conclusion: The question was answered against the assessee. The reassessment under Section 34 could proceed in respect of the escaped income, and the assessee had no right in those proceedings to reopen other unconnected heads of assessment.

Ratio Decidendi: Section 34 authorises reassessment only of the income that has escaped assessment, and does not permit the assessee to reopen and contest unrelated parts of the original assessment on the ground that they were over-assessed.

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