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Section 147(b) of the Income-tax Act, 1961 - Income escaping assessment - Position prior to 1-4-1989 - Assessment year 1959-60 - ITO calculated assessee's income by applying one of methods permitted under rule 33 of Income-tax Rules, 1922 - Subsequently, ITO reopened assessment under section 147(b) and, by applying a different method determined total income at higher figure - AAC as well as Tribunal held that proceedings under section 147(b) were bad and that ITO could not adopt an alternative method of computation in reassessment proceedings - High Court upheld Tribunal's order - Whether in view of fact that order made by ITO at time of original assessment was a legally correct order, mere fact that adoption of different method of computation would have resulted in higher yield of tax would not justify reopening of assessment under section 147(b) - Held, yes - Whether, therefore, order passed by ITO under section 147(b) was rightly set aside by High Court - Held, yes FACTS The assessee, a non-resident company was carrying on business as construction engineers. Its original assessment for the relevant assessment year was completed on total income of Rs. 21,49,169. This included income from certain contracts in India, computed by applying one of the methods permitted under rule 33 of the Income-tax Rules, 1922 (Rule 10 of the Income-tax Rules, 1962). Subsequently, the ITO re-opened the assessment under section 147(b) and, by applying a different method, resulting in higher tax liability, determined the total income at Rs. 69,85,097. On appeal, the AAC held that the proceedings under section 147(b) were bad and that the Income-tax Officer could not adopt an alternative method of computation in the reassessment proceedings. He, therefore, allowed the appeal. On further appeal by the revenue, the Tribunal was also of the opinion that the Income-tax Officer could not in reassessment proceedings depart from the method of computation adopted in the original assessment. The Tribunal directed that the reassessment be made adopting the same method of computation as in the original assessment subject to any adjustments which might be justified. On reference, the High…

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