Reassessment notice limits: a clause (a) notice cannot revive a clause (b) item after limitation expires.

A reassessment notice issued under section 34(1)(a) was valid, but it could not be used to bring to tax an item falling only under section 34(1)(b) after the four-year limitation for that clause had expired. The Court held that section 34 created distinct fields of operation with separate limitation periods, so a notice under clause (a) could authorise reassessment only within that clause and could not be converted into a clause (b) notice to overcome the statutory bar. The item therefore remained outside reassessment jurisdiction, and the answer was in favour of the assessee.

---

---

Issues: Whether, in reassessment proceedings validly initiated under section 34(1)(a) of the Indian Income-tax Act, 1922, the Income-tax Officer could also bring to tax an item which fell only under section 34(1)(b) and for which the four-year limitation period had expired, when that item had been allowed in the original assessment but was admittedly not a permissible deduction under section 10.

Analysis: The reopening of assessment was valid, but section 34 was held to contain two distinct forms of notice with different fields of operation and different limitation periods. A notice expressly under clause (a) could authorise reassessment of all escaped items falling within clause (a), but it could not be used to bypass the separate four-year bar governing clause (b). The Court distinguished authorities dealing with reassessment de novo and held that the Supreme Court's statement that the entire escaped income may be assessed afresh did not authorise conversion of a clause (a) notice into a clause (b) notice after limitation had expired. The power to reassess escaped income had therefore to remain within the statutory limits attached to the particular clause under which the notice was issued.

Conclusion: The Income-tax Officer could not, in proceedings initiated under section 34(1)(a), add back an item assessable only under section 34(1)(b) after the expiry of the four-year period. The answer was in the negative and in favour of the assessee.

Ratio Decidendi: A reassessment notice is controlled by the specific statutory clause under which it is issued, and the limitation applicable to one clause cannot be circumvented by invoking the jurisdiction of another clause in respect of a different escaped item.

---