Reassessment reopens the whole tax computation, but concessional dividend rebate remains confined to the years expressly covered.

Reassessment under section 34 reopens the assessment as a whole and requires total income and tax liability to be determined afresh, so a lawful rebate on dividend income may be claimed in reassessment even if it was not raised in the original proceedings, provided it was not previously decided. Paragraph 6A of the Part B States (Taxation Concessions) Order, 1950, however, applies only within the assessment years expressly covered by it and cannot be extended to later years. The concessional rebate was confined to the specified years at the rates stated in the provision, and no rebate was available for the later assessment year.

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Issues: (i) Whether rebate under paragraph 6A of the Part B States (Taxation Concessions) Order, 1950 was admissible in reassessment proceedings in respect of the entire dividend income, including dividend income already assessed in the original assessment. (ii) Whether rebate under paragraph 6A was available for assessment year 1955-56 and at what rates for the relevant assessment years.

Issue (i): Whether rebate under paragraph 6A of the Part B States (Taxation Concessions) Order, 1950 was admissible in reassessment proceedings in respect of the entire dividend income, including dividend income already assessed in the original assessment.

Analysis: Reassessment under section 34 of the Indian Income-tax Act, 1922 was held to reopen the assessment as a whole and to substitute the original assessment order. Once reassessment proceedings commence, the total income and the tax payable have to be determined afresh, and the assessee is not barred from claiming a lawful rebate merely because the point was not raised in the original assessment or the appeal therefrom, so long as the issue had not been expressly decided earlier.

Conclusion: The rebate under paragraph 6A was admissible in reassessment proceedings in respect of the entire dividend income, including the actual dividend income earlier assessed, in favour of the assessee.

Issue (ii): Whether rebate under paragraph 6A was available for assessment year 1955-56 and at what rates for the relevant assessment years.

Analysis: Paragraph 6A specifically covered the assessment years ending on 31 March 1953, 31 March 1954 and 31 March 1955, and the proviso concerning dividend income regulated the manner of computation without enlarging the temporal scope of the concession. The concessional rebate could not be extended to assessment year 1955-56, and the prescribed rates under the paragraph were confined to the years expressly mentioned in it.

Conclusion: Rebate was allowable only for the assessment years 1952-53, 1953-54 and 1954-55 at 40%, 20% and 10% respectively, and no rebate was admissible for assessment year 1955-56, against the assessee on that part.

Final Conclusion: Reassessment proceedings reopened the computation of total income and tax payable so as to permit the assessee to claim the statutory rebate on dividend income not earlier allowed, but the concession remained confined to the assessment years expressly covered by paragraph 6A.

Ratio Decidendi: When reassessment sets aside the original assessment, the entire assessment is reopened and lawful rebates or deductions not previously adjudicated may be claimed, but a concessionary provision must be applied strictly within the assessment years and limits expressly fixed by it.

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