Reassessment jurisdiction cannot be extended through rectification to make a fresh closing stock addition after reassessment ends.

After reassessment under section 147 was completed on specified reasons, the Assessing Officer could not use section 154 to make a fresh addition for alleged closing stock discrepancy that was never addressed in the reassessment order. Section 147, read with Explanation 3, permits consideration of escaped income within reassessment proceedings, but that jurisdiction does not extend beyond the concluded reassessment. Rectification under section 154 is limited to a mistake apparent from the record and cannot be used to introduce a substantive new addition after reassessment has ended. The rectification order and resulting addition were held to be without jurisdiction and unsustainable.

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Issues: Whether, after completion of reassessment proceedings under section 147, the Assessing Officer could invoke section 154 of the Income-tax Act, 1961 to make a further addition on account of alleged discrepancy in closing stock, and whether such rectification was within jurisdiction.

Analysis: The reassessment proceedings were initiated on specified reasons relating to travelling expenses and purchase of foreign exchange. The alleged difference in closing stock did not form part of the recorded reasons and was not dealt with in the reassessment proceedings. Section 147, including Explanation 3, enables assessment or reassessment of escaped income during the reassessment proceedings, even on issues not originally recorded, but that power operates within the reassessment jurisdiction itself. Once those proceedings concluded, the Assessing Officer could not rely on section 154 to introduce a fresh addition on an issue never addressed in the reassessment order. Rectification under section 154 is confined to a mistake apparent from the record and cannot be used to make a substantive fresh addition after reassessment has ended.

Conclusion: The rectification order and the resulting addition on account of closing stock were without jurisdiction and unsustainable.

Final Conclusion: The addition made by way of rectification was deleted and the assessee succeeded in the appeal.

Ratio Decidendi: The power to assess or reassess escaped income under section 147, including Explanation 3, cannot be extended through section 154 after reassessment is complete to make a fresh substantive addition on an issue not considered in the reassessment order.

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