Scope of reassessment: once s.34(1)(b) proceedings are validly initiated, the AO may assess all escaped income for the year.

Interprets the scope of reassessment under section 34(1)(b): the qualifier "such" does not confine inquiry to the specific item that prompted reopening; where proceedings under s.34(1)(b) are validly initiated the Assessing Officer may examine and assess all income which has escaped assessment for that year. Operative effect: reassessment is not limited to known income at notice issuance and the revenue's entitlement to assess additional escaped income is affirmed.

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Issues: Whether, once valid proceedings are initiated under section 34(1)(b) of the Income-tax Act, the Assessing Officer may assess only the specific income known to have escaped assessment at the time the notice is issued, or may assess any and all income which has escaped assessment for that year.

Analysis: The Court examined the meaning of the qualifying word "such" in the phrase "such income, profits or gains which have escaped assessment" and considered earlier High Court decisions construing section 34 as amended. Relying on precedent, the Court analysed the statutory language and its ordinary grammatical and logical construction, and reviewed authorities holding that once reassessment proceedings under section 34 are validly commenced the Officer is not restricted to information that prompted reopening but may take into account other escaped income discovered during reassessment.

Conclusion: The Court concluded that where proceedings under section 34(1)(b) are validly begun, the Assessing Officer is entitled to assess the entire income that has escaped assessment for the year, not merely the portion specifically known at the time the notice was issued; decision is in favour of the Revenue.

Ratio Decidendi: Where reassessment under section 34(1)(b) is validly initiated, the Assessing Officer has both the jurisdiction and duty to assess all income which has escaped assessment for the relevant year, and is not limited to the specific item of income that prompted the reopening.

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