Reassessment limits: escaped income from another year cannot justify reopening an earlier assessment without nondisclosure for that year.

Reassessment under the Income-tax Act could not be sustained where the alleged escapement was tied to a different assessment year and there was no omission to disclose material facts for the year sought to be reopened. The amount had already been examined in later proceedings, and it could not be recast as escaped income of the earlier year to invoke reassessment powers. On these undisputed facts, section 147(a) was held inapplicable, the notice under section 148 was without jurisdiction and time-barred, and the impugned reassessment proceedings were set aside.

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Issues: Whether the reassessment notice issued under section 148 of the Income-tax Act, 1961 for assessment year 1957-58 was valid, and whether the case could be brought within section 147(a) so as to avoid the bar of limitation.

Analysis: The disputed amount had already been discovered and assessed in the proceedings relating to assessment year 1958-59, and it escaped tax only because the Appellate Tribunal ultimately did not sustain the full addition. The omission or failure referred to in section 147(a) must relate to the relevant assessment year for which reassessment is sought. Here, there was no omission by the assessee to disclose material facts for assessment year 1957-58, because the amount was not legally assessable for that year on the facts then existing. The attempt to recast the same amount as escaped income of an earlier year by invoking section 69 did not make section 147(a) applicable. The Court also held that, on these undisputed facts, the question was open to judicial review and was not merely for the department to decide.

Conclusion: Section 147(a) was not attracted, the notice under section 148 was without jurisdiction and time-barred, and the assessee was entitled to relief.

Final Conclusion: The reassessment proceedings could not be sustained and the impugned notices and consequential steps were set aside.

Ratio Decidendi: For reassessment under section 147(a), the omission or failure to disclose must be referable to the relevant assessment year sought to be reopened; income that escaped assessment only because it was omitted in later appellate proceedings cannot be reopened for an earlier year by recasting it as escaped income of that earlier year.

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