Since the assessment is open again, can you use the reassessment to raise claims you missed the first time?
No. Reassessment proceedings are for the benefit of the revenue. You cannot reopen matters concluded in the original assessment, or press claims you failed to make or which were rejected — that would turn the reassessment into an appeal in disguise.
Decided by the Supreme Court (Supreme Court of India — Yogeshwar Dayal and A.S. Anand JJ (judgment by Anand J)) on 1992-09-17, reported as (1992) 198 ITR 297 (SC). It bears on section 147, section 148 of the Income Tax Act 1961, in Reassessment & Reopening matters.
Included because it cuts against the taxpayer, and because it is the standard answer when a return filed in response to a s.148 notice tries to fix something unrelated. Knowing its limit — issues that never attained finality — is what makes it usable.
Binding on every court and authority in India.
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For assessment year 1960-61 the assessee filed a return on 17 November 1960 showing a loss of Rs 35,418, and for 1961-62 a return on 4 October 1961 showing a loss of Rs 24,314. Both were late. On 12 December 1962 the Income-tax Officer told the assessee that the loss returns, being beyond time, were invalid, that no action on them was necessary and that the proceedings for both years were filed. The Appellate Assistant Commissioner thought the Officer had been wrong to file the returns without computing the loss, but held that no relief could be granted and dismissed the appeals; the assessee took the matter no further, so those orders became final. The assessee then filed a disclosure petition about certain hundi loans and, on a settlement, became assessable for Rs 27,000 for 1960-61 and Rs 9,000 for 1961-62. The Officer treated those sums as escaped income and taxed them under s.147(a). In the reassessment the assessee sought to have the earlier losses redetermined, set off against the escaped income and carried forward. The Appellate Assistant Commissioner allowed that, the Tribunal reversed him, and on a reference the Calcutta High Court answered in the assessee's favour, from which the Revenue appealed.
The Revenue's appeals were allowed, the Calcutta High Court's order set aside and the Tribunal's order restored. On a valid reopening under s.147 it is only the under-assessment that is set aside, not the entire assessment: the officer may bring to charge escaped income beyond the item that prompted the notice, but his jurisdiction does not extend to revising, reopening or reconsidering the whole assessment, or to letting the assessee reagitate what was decided in the original proceedings. Reassessment is for the benefit of the revenue, so the assessee cannot claim recomputation of income or a redoing of the assessment to obtain a claim he failed to make or that was rejected and has become final. Two things remain open to him: he may show that the income said to have escaped did not in fact escape, and in respect of the escaped item he may claim deductions of expenditure or argue its non-taxability - but even where such claims succeed, the income on reassessment cannot be reduced below the income originally assessed.
The Court read its earlier decision in V. Jaganmohan Rao as going only so far as this: on a valid reopening the previous under-assessment is set aside and the officer has jurisdiction and a duty to tax the entire escaped income of that year. What is set aside is the previous under-assessment, not the original assessment proceedings, which retain their character and identity where they have acquired finality. Jaganmohan Rao could not be read as wiping out the original assessment and starting the proceedings de novo; that reading was erroneous, against the language of s.147 and against the object of reassessment, and took the judgment out of the context in which the question arose. From this the Court stated the wider caution that it is neither desirable nor permissible to pick a word or sentence out of a judgment, divorced from the question under consideration, and treat it as the complete law declared; a judgment must be read as a whole and takes its colour from the questions involved. Section 147, though in a taxing statute, imposes no charge and is machinery, to be construed so as to remain workable; being for the benefit of the revenue, it cannot be turned into revisional or review proceedings at the assessee's instance. On the facts, the set-off was rightly refused because no set-off had been claimed or permitted originally, the original assessment had become final when the appeal failed before the Appellate Assistant Commissioner and no further step was taken, and the items the assessee wanted taken into account were unconnected with the escapement of income.
an assessee cannot be permitted to convert the reassessment proceedings as his appeal or revision, in disguise
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Handle my notice → Ask a CA on WhatsAppNo. Reassessment proceedings are for the benefit of the revenue. You cannot reopen matters concluded in the original assessment, or press claims you failed to make or which were rejected — that would turn the reassessment into an appeal in disguise. This was decided by the Supreme Court (Supreme Court of India — Yogeshwar Dayal and A.S. Anand JJ (judgment by Anand J)) and bears on section 147, section 148 of the Income Tax Act 1961. It is reported as (1992) 198 ITR 297 (SC). Included because it cuts against the taxpayer, and because it is the standard answer when a return filed in response to a s.148 notice tries to fix something unrelated. Knowing its limit — issues that never attained finality — is what makes it usable. If it applies to you, the first step is this: Do not use a s.148 return to raise unrelated claims you could have made earlier; expect them to be rejected.
For assessment year 1960-61 the assessee filed a return on 17 November 1960 showing a loss of Rs 35,418, and for 1961-62 a return on 4 October 1961 showing a loss of Rs 24,314. Both were late. On 12 December 1962 the Income-tax Officer told the assessee that the loss returns, being beyond time, were invalid, that no action on them was necessary and that the proceedings for both years were filed. The Appellate Assistant Commissioner thought the Officer had been wrong to file the returns without computing the loss, but held that no relief could be granted and dismissed the appeals; the assessee took the matter no further, so those orders became final. The assessee then filed a disclosure petition about certain hundi loans and, on a settlement, became assessable for Rs 27,000 for 1960-61 and Rs 9,000 for 1961-62. The Officer treated those sums as escaped income and taxed them under s.147(a). In the reassessment the assessee sought to have the earlier losses redetermined, set off against the escaped income and carried forward. The Appellate Assistant Commissioner allowed that, the Tribunal reversed him, and on a reference the Calcutta High Court answered in the assessee's favour, from which the Revenue appealed. The matter was decided on 1992-09-17 by the Supreme Court (Supreme Court of India — Yogeshwar Dayal and A.S. Anand JJ (judgment by Anand J)). On those facts the Supreme Court held as follows. The Revenue's appeals were allowed, the Calcutta High Court's order set aside and the Tribunal's order restored. On a valid reopening under s.147 it is only the under-assessment that is set aside, not the entire assessment: the officer may bring to charge escaped income beyond the item that prompted the notice, but his jurisdiction does not extend to revising, reopening or reconsidering the whole assessment, or to letting the assessee reagitate what was decided in the original proceedings. Reassessment is for the benefit of the revenue, so the assessee cannot claim recomputation of income or a redoing of the assessment to obtain a claim he failed to make or that was rejected and has become final. Two things remain open to him: he may show that the income said to have escaped did not in fact escape, and in respect of the escaped item he may claim deductions of expenditure or argue its non-taxability - but even where such claims succeed, the income on reassessment cannot be reduced below the income originally assessed.
The Court read its earlier decision in V. Jaganmohan Rao as going only so far as this: on a valid reopening the previous under-assessment is set aside and the officer has jurisdiction and a duty to tax the entire escaped income of that year. What is set aside is the previous under-assessment, not the original assessment proceedings, which retain their character and identity where they have acquired finality. Jaganmohan Rao could not be read as wiping out the original assessment and starting the proceedings de novo; that reading was erroneous, against the language of s.147 and against the object of reassessment, and took the judgment out of the context in which the question arose. From this the Court stated the wider caution that it is neither desirable nor permissible to pick a word or sentence out of a judgment, divorced from the question under consideration, and treat it as the complete law declared; a judgment must be read as a whole and takes its colour from the questions involved. Section 147, though in a taxing statute, imposes no charge and is machinery, to be construed so as to remain workable; being for the benefit of the revenue, it cannot be turned into revisional or review proceedings at the assessee's instance. On the facts, the set-off was rightly refused because no set-off had been claimed or permitted originally, the original assessment had become final when the appeal failed before the Appellate Assistant Commissioner and no further step was taken, and the items the assessee wanted taken into account were unconnected with the escapement of income. In the words reproduced by the source cited on this page: "an assessee cannot be permitted to convert the reassessment proceedings as his appeal or revision, in disguise"
It was decided by the Supreme Court on 1992-09-17 and is reported as (1992) 198 ITR 297 (SC). Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 147, section 148, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The Revenue's appeals were allowed, the Calcutta High Court's order set aside and the Tribunal's order restored. On a valid reopening under s.147 it is only the under-assessment that is set aside, not the entire assessment: the officer may bring to charge escaped income beyond the item that prompted the notice, but his jurisdiction does not extend to revising, reopening or reconsidering the whole assessment, or to letting the assessee reagitate what was decided in the original proceedings. Reassessment is for the benefit of the revenue, so the assessee cannot claim recomputation of income or a redoing of the assessment to obtain a claim he failed to make or that was rejected and has become final. Two things remain open to him: he may show that the income said to have escaped did not in fact escape, and in respect of the escaped item he may claim deductions of expenditure or argue its non-taxability - but even where such claims succeed, the income on reassessment cannot be reduced below the income originally assessed. It arises in Reassessment & Reopening matters, on section 147, section 148 of the Income Tax Act 1961, and was decided by Supreme Court of India — Yogeshwar Dayal and A.S. Anand JJ (judgment by Anand J). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where an issue was never concluded in the original assessment, say so — the Tribunal has confined Sun Engineering to concluded issues. Note its second holding too: do not lift a sentence from a judgment out of context, because the department will do the same to you.
Still good law. Not overruled and still the leading authority on the limited scope of reassessment for the assessee, but its reach has been confined: the ITAT Mumbai in Export Credit Guarantee Corp v ITO held that Sun Engineering had to be confined to a case where the issue had attained finality in the original proceedings, so issues that have not attained finality may be re-raised. That finding was checked against a published source, which is linked on this page, on 2026-08-25. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This one favours the revenue and is here deliberately. It is also the authority behind the s.263 limitation point in Alagendran Finance. Two points of scope. First, the decision is in substance a reading-down of V. Jaganmohan Rao v. CIT [1970] 75 ITR 373: what a valid reopening sets aside is the under-assessment, not the original assessment. Second, it is not a blanket bar on an assessee raising anything in reassessment - the judgment preserves his right to show the income did not escape at all, and to claim deductions or argue non-taxability in respect of the escaped item, subject to the floor that the income cannot be reduced below that originally assessed. The Court reversed the Calcutta High Court decision under appeal and disapproved the broad propositions in seven other High Court decisions, so pre-1992 High Court authority on this point should be checked against the list. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Revenue's appeals were allowed, the Calcutta High Court's order set aside and the Tribunal's order restored. On a valid reopening under s.147 it is only the under-assessment that is set aside, not the entire assessment: the officer may bring to charge escaped income beyond the item that prompted the notice, but his jurisdiction does not extend to revising, reopening or reconsidering the whole assessment, or to letting the assessee reagitate what was decided in the original proceedings. Reassessment is for the benefit of the revenue, so the assessee cannot claim recomputation of income or a redoing of the assessment to obtain a claim he failed to make or that was rejected and has become final. Two things remain open to him: he may show that the income said to have escaped did not in fact escape, and in respect of the escaped item he may claim deductions of expenditure or argue its non-taxability - but even where such claims succeed, the income on reassessment cannot be reduced below the income originally assessed.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
My return was only processed under 143(1). Does that stop the department reopening it later?
How much am I actually required to disclose — and can they reopen because the officer drew the wrong conclusion?
The sanctioning authority just wrote 'yes' and signed. Is that a sanction?
A reassessment was done in between. Does the two-year clock for s.263 restart from it?