Once proceedings of reassessment are initiated, the original order of assessment loses its finality and at this stage it is no longer open for revision by the Commissioner.

( 1 ) GENERAL Beopar Co. (P.) Ltd. , the assessee, is a private limited company. Some time in 1968, M/s Dabri Investment Private Ltd. , another private limited company, was amalgamated with the assessee whereupon all assets and liabilities of the latter devolved on the assessee. M/s Dabri Investment Pvt. Ltd. had prior to its amalgamation taken on lease a property which had been let out under a sublease. Subsequent to the amalgamation, the rent from the sub-lease of the said property came to be assessed in the hands of the assessee.

( 2 ) THE assessee was assessed to income-tax in the assessment year 1973-74, the accounting year ending on June 30, 1972. In the said year, the total income of the assessee was assessed at Rs. 1,84,399 of which Rs. 50,083 was found to have arisen from the business of the assessee. The rent from the sub-lease of the said property which was accruing in the hands of the assessee was calculated at Rs. 94,808 and income from dividend was calculated to be Rs. 34,508 aggregating to Rs. 1,34,316. Business losses suffered by the assessee in the earlier assessment years 1969-70 and 1970-71 were carried forward to the said assessment year for set off against the total income of the assessee, in the year involved, and the taxable income after such set off was computed as nil.

( 3 ) THE assessee preferred an appeal against this assessment before the Appellate Assistant Commissioner. It was contended that the Income-tax Officer had disallowed deduction under Section 80m of the Income-tax Act, 1961, in respect of the dividend earned by the assessee. The Appellate Assistant Commissioner accepted the contention of the assessee and by his order dated May 26, 1975, directed the Income-tax Officer to allow deduction under Section 80m as claimed. It was also pointed out to the Appellate Assistant Commissioner that in computing the income arising from dividend and house rent, the Income-tax Officer had made a typographical mistake and had arrived at a total of Rs. 1,34,316 whereas the correct figure would be Rs. 1,29,316. The Appellate Assistant Commissioner further directed the Income-tax Officer to rectify this typographical mistake in the assessment and give relief to the assessee accordingly.

( 4 ) THEREAFTER, the Income-tax Officer issued a notice to the assessee on September 3, 1975, stating that there had been a mistake in setting off the carried forward business losses against the assessee's income under the head "other sources" and that it was proposed to set off the carried, forward business losses only against the income arising from the business of the assessee.

( 5 ) THE assessee in the proceedings before the Income-tax Officer appeared and contended that apart from the admitted business income of the assessee, the rent earned by the assessee under the sub-lease should also have been assessed under the head "business" as such income arose out of the business activities of the assessee and the carried forward business losses should also be set off against the said income. The Income-tax Officer accepted the contentions of the assessee and held that only the income by way of dividend should not be considered to be the assessee's business income and set off the carried forward business loss against the business income of the assessee as also the rent realised from the sub-lease. The assessment was corrected accordingly by the order of the Income-tax Officer dated October 1, 1975.

( 6 ) SUBSEQUENTLY, by a notice issued under Section 148 of the Income-tax Act, 1961, dated November 11, 1976, the assessment for the said assessment year 1973-74 was sought to be reopened.

( 7 ) DURING the pendency of the said proceedings, the Commissioner of Income-tax issued a notice dated December 13, 1976, under Section 263 of the Income-tax Act, 1961, stating, inter alia, that the original order of assessment dated February 13, 1975, and the subsequent order passed under Section 154 of the Income-tax