Section 34 reassessment is limited to escaped income and does not require reopening the assessee's entire taxable income.

Section 34 was treated as a limited remedy for income escaping assessment or being assessed at too low a rate, and the enquiry under it was confined to the escaped item or the facts supporting the higher rate. The Income Tax Officer was required to consider whether there had been any omission and whether the rate increase was justified, but was not bound to reopen and redetermine the assessee's entire taxable income afresh. Items not in issue or not affected by the Section 34 action did not have to be disturbed.

---

---

Issues: Whether, when proceedings are taken under Section 34 to raise the rate of tax on the ground that the original rate was too low, the Income Tax Officer is bound to reopen and redetermine afresh the whole taxable income of the assessee.

Analysis: Section 34 was treated as a provision directed to a specific case of income escaping assessment or being assessed at too low a rate. The enquiry under that section was held to extend only to the item or items that had escaped assessment and to the facts on which the higher rate depended. The assessee was entitled to show that there had been no omission, but the section did not require the entire assessment to be reopened or every head of income to be reconsidered afresh. Final items not in question were not required to be disturbed.

Conclusion: The Income Tax Officer is not bound to determine afresh the correct taxable income of the assessee when action is taken under Section 34 to raise the rate of tax.

---