Reassessment jurisdiction under section 34(1)(b) remains valid despite a mistaken notice description of the triggering limb.

Section 34(1)(b) of the Indian Income-tax Act, 1922 was treated as conferring composite reassessment jurisdiction covering the different situations stated in the provision. A notice that referred to excessive relief and did not expressly mention the alternative limb of assessment at too low a rate was held not to fail on that ground, because the notice was not a statutory form and the mistaken description did not go to the root of jurisdiction. Rebate granted under the Finance Act, 1956 could affect the measure of tax and amount to assessment at too low a rate, so initiation of proceedings was valid.

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Issues: Whether the Income-tax Officer was competent to initiate proceedings under section 34(1)(b) of the Indian Income-tax Act, 1922, for bringing to tax excessive rebate granted to the assessee, notwithstanding that the notice referred to excessive relief and omitted the other limb relating to assessment at too low a rate.

Analysis: The reassessment power under section 34(1)(b) was treated as a composite jurisdiction covering the different situations specified in that provision. The notice issued by the Income-tax Officer was not a statutory form and the mistaken reference in it to only one limb did not go to the root of jurisdiction. Since the rebate granted under the Finance Act, 1956, affected the measure of tax and could amount to assessment at too low a rate, the initiation of proceedings was held to be valid. The substance of the jurisdiction exercised prevailed over the administrative description used in the notice.

Conclusion: The initiation of proceedings under section 34(1)(b) was valid, and the issue was decided against the assessee and in favour of the Revenue.

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