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TMI Blog1984 (10) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from the date of the earlier order of rectification or from the date of the order of reassessment ? The facts behind the legal formulation are as follows: The assessee is a company and the assessment for the year 1963-64 was completed under section 143(3) on March 23, 1965. In that order, the rebate under section 84 was worked out as admissible to the extent of Rs. 7,69,233. The assessee by a letter dated June 16, 1965, invited the attention of the Income-tax Officer (I.T.O.) that there was a mistake in the calculation of the average capital and the rebate should be restricted to Rs. 6,59,368 against the larger amount allowed in the assessment. Consequently, the Income-tax Officer made an order of rectification under section 154 on F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 154 dated February 25, 1967, as the starting point for limitation, the determination of the rebate at Rs. 6,59,368 had become final within four years from that date and the assessee had got a vested right to that relief which could not be taken away except by authority of law thereafter. There being no such authority under the law for denying the assessee the rebate which had become final, the order passed by the Income-tax Officer on June 29, 1974, is clearly barred by time .... .. Section 154(7) provides a period of four years for rectification of mistake from the date of the order sought to be amended. The question now for consideration is whether that four years should be reckoned from the original assessment order dated March 23, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. CIT [1970] 75 ITR 373 (SC), the scope of section 34(1)(b) of the Indian Income-tax Act, 1922, arose for consideration before the Supreme Court. That section relates to reassessment in the case of income escaping assessment. It was held that once an assessment is reopened, the previous underassessment is set aside and the whole proceedings start afresh. To be more accurate, this is what V. Ramaswami J., speaking for the court, observed (at p. 380): "It is, therefore, manifest that once an assessment is reopened by issuing a notice under sub-section (2) of section 22, the previous underassessment is set aside and the whole assessment proceedings start afresh. When once valid proceedings are started under section 34(1)(b), the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Mysore Sales Tax Rules is also without substance. What was sought to be rectified was the assessment order rectified as a consequence of this court's decision in Yaddalam's case [1965] 16 STC 231 (SC). After such rectification, the original assessment order was no longer in force and that was not the order sought to be rectified. It is admitted that all the rectification orders would be within time calculated from the original rectification order. Rule 38 itself speaks of 'any order' and there is no doubt that the rectified order is also 'any order' which can be rectified under rule 38. " This statement of the law has been reiterated by the Supreme Court in Deputy Commissioner of Commercial Taxes v. H. R. Sri Ramulu [1977] 39 STC 177. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment orders. " The learned judge after referring to the principles enunciated in the International Cotton Corporation's case [1975] 35 STC 1 (SC), extended those principles also to the cases of reassessment (at p. 181 of 39 STC): " Although the above case related to an order which had been subsequently rectified, the principle laid down therein would, in our opinion, be also applicable in cases where reassessment is made on the ground that certain amounts of turnover had escaped assessment. It will be clear from these decisions that when a former assessment is reopened though it has become final, the assessing officer is required to assess the assessee on his total income or the turnover, as the case may be, and not merely on his e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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