Reassessment of composite business income allowed recomputation of all components; enhancement on a mistaken power issue was unsustainable.

A reassessment under section 34 covering the assessee's total income from one composite business permitted recomputation of the whole assessable income, even though the Income-tax Officer had treated the receipts under separate transport and lorry heads. The earlier limitation on reassessment, applicable where only escaped or under-assessed income was in issue, did not control this situation because the reassessment concerned the same business as a whole. The Appellate Assistant Commissioner's enhancement of the revised income was therefore unsustainable, as it rested only on the mistaken view that the Income-tax Officer could not reduce one component while increasing another. The answer was in favour of the assessee.

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Issues: Whether the Appellate Assistant Commissioner was justified in enhancing the revised income by Rs. 3,822 while dealing with a reassessment under section 34.

Analysis: The reassessment notice was for the assessee's total income from one composite business, even though the Income-tax Officer had split the receipts into transport and lorry business heads. In the reassessment, the Income-tax Officer increased one component and reduced the other, but the overall assessable income was higher than before. The earlier decision limiting the scope of reassessment where only escaped or under-assessed income was in issue did not apply to a case where the total income of the same business was being recomputed. The enhancement made solely on the assumption that the Income-tax Officer lacked power to reduce one component was therefore unsupported.

Conclusion: The Appellate Assistant Commissioner was not justified in law in enhancing the revised income by Rs. 3,822, and the answer was in favour of the assessee.

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