JUDGMENT Tarun Agarwala, J. 1. This is an appeal filed by the Department for the assessment year 1999-2000, which was admitted at the following substantial questions of law: - "1. Whether on the facts and in the circumstances of the case, the Tribunal is justified in upholding the order of the CIT(A) in holding that the issue of commission paid having not been covered by the reasons recorded within the meaning of Section 148 (2) as such the reopening u/s. 147/148 of the Act is not valid under the law? 2. Whether on the facts and in the circumstances of the case, the Tribunal is justified in upholding the order of the CIT(A) in holding that the re-opening of assessment u/s. 147/148 is bad in law?" 2. The facts leading to the filing of the appeal is, that the assessee had filed his return on 31.1.1999 showing a loss of Rs. 15,54,275/-. The said return was processed on 31st March, 2000. Proceedings were initiated on 18.10.2001 under Section 147 of the Income Tax Act (hereinafter referred to as the "Act") and the notice under Section 148 of the Act was served on the appellant on 19.1.2001. The reasons recorded by the assessing officer for reopening the assessment is as under: "Reasons: 18.10.2001. On going through the case records, sit is seen that as per annexure-2 & 3 of the Tax Audit Report, the assessee has made valuation of closing stock of raw material at cost. The raw material of the assessee is Iron ingots & Billets on which excise duty and trade tax was paid at the time of purchase. The purchases made by the assessee have been reduced by the value of excise duty and trade tax, only net amount has been debited to purchase account. The valuation of closing stock of raw material has been made by the assessee on purchase price without including excise duty and trade tax. The assessee has shown closing stock at Rs. 45,52,265/- on which excise duty @ 15 $% comes to Rs. 6,84,340/- and the assessee has also paid trade at Rs. 55,554/- as per annexure 3 of the Audit report. Thus the assessee has not included the amount of Rs. The assessee has shown closing stock at Rs. 45,52,265/- on which excise duty @ 15 $% comes to Rs. 6,84,340/- and the assessee has also paid trade at Rs. 55,554/- as per annexure 3 of the Audit report. Thus the assessee has not included the amount of Rs. 7,38,994/- (684340=55554) on account of excise duty and trade tax while valuing the closing stock of raw material as the provisions of section 145A of the Income Tax Act, 1961 have been introduced w.e.f. 1.4.1999. Therefore, I have reason to believe that the assessee's income of Rs. 7,38,994/- has escaped from assessment. Hence action u/s. 147 Explanation 2 of the Income Tax Act, 1961 is taken. Issue notice u/s. 148 of the Income tax Act, 1961. Sd/- ACIT, Circle 1, M. Nagar" 3. Based on the aforesaid reasons to believe, the case was reopened under Section 148 of the Act as the appellant had shown less value of the raw material amounting to Rs. 7,38,994/- in the closing stock. After due investigation the assessing officer made the addition of Rs. 49,278/- on the valuation of the closing stock due to less value of the raw material and also added Rs. 54,07,792/- on the commission paid by the petitioner to Pashupati Casting Pvt. Ltd., Aligarh. The assessing officer also disallowed certain telephone expenditure, advertisement and payment made to catering service. 4. The assessee, being aggrieved, filed an appeal before the Commissioner of Income Tax, who partly allowed the appeal holding that the reassessment proceedings were validly reopened. The appellate authority found that the assessee had claimed 50% of depreciation against the admissible rate of 40% and, therefore, the assessing officer had valid reason to believe that income had escaped assessment and, therefore, reassessment proceedings were validly reopened under Section 148 of the Act in respect of the amount of Rs. 7,38,994/-. The appellate authority, however, held that the assessing officer was not justified in making the addition in respect of the commission paid to Pashupati Casting Pvt. Ltd. amounting to Rs. 54,07,792/-. The appellate authority found that the assessee had claimed as expenditure on the commission of Rs. 7,38,994/-. The appellate authority, however, held that the assessing officer was not justified in making the addition in respect of the commission paid to Pashupati Casting Pvt. Ltd. amounting to Rs. 54,07,792/-. The appellate authority found that the assessee had claimed as expenditure on the commission of Rs. 58,51,913/- in his Trading and Profit and Loss Account and the same was available on the record and, therefore, in the absence of any reason being recorded on this issue coupled with the fact that the said information was already available on record, the appellate authority held, that the assessing officer was not justified in reopening the assessment in respect of commission paid to Pashupati Casting Pvt. Limited and, consequently, deleted the said addition. The Department, being aggrieved, filed an appeal, which was dismissed and, consequently, the present appeal has been filed. 5. We have heard Sri R.K. Upadhyay, the learned counsel for the appellant and Sri Rakesh Ranjan Agarwal, the learned senior counsel along with Sri Suyash Agarwal for the assessee. 6. The learned counsel for the Department submitted that once assessment proceedings are reopened under Section 147 of the Act, the assessing officer was justified in making a fresh assessment of the entire income and, therefore, could also reconsider the question of claiming deduction on the commission paid by the petitioner. 7. In support of the submission, the learned counsel placed reliance upon a decision of the Supreme Court in V. Jaganmohan Rao and others v. Commissioner of Income-Tax and Excess Profits Tax, Andhra Pradesh, : 75 ITR 373 and Income Tax Officer and another v. K.L. Srihari and others, : 250 ITR 193. 8. The decision of the Supreme Court in V. Jaganmohan Rao (supra) is not applicable in the instant case as it is a case of re-assessment under Section 34 of the Income Tax Act, 1922, which provision underwent a substantial change under Sections 147 and148 of the Income Tax Act, 1961. After the amendment of the Income Tax Act, 1989, the provisions for reassessment further underwent a change. 9. The Supreme Court in the aforesaid decision held, that once proceedings under Section 34 of the Act are validly initiated, the jurisdiction of the Income Tax Officer is not restricted to the portion of the income that escapes assessment. After the amendment of the Income Tax Act, 1989, the provisions for reassessment further underwent a change. 9. The Supreme Court in the aforesaid decision held, that once proceedings under Section 34 of the Act are validly initiated, the jurisdiction of the Income Tax Officer is not restricted to the portion of the income that escapes assessment. The Supreme Court held, that once a valid notice is served and assessment is reopened, the previous under assessment is set aside and the whole proceedings starts afresh. The same view was reiterated following the aforesaid decisions in the case of K.L. Srihari (supra). 10. The aforesaid situation has changed in reassessment proceedings under the Income Tax Act, 1961. 11. The Supreme Court in Commissioner of Income Tax v. M/s. Sun Engineering Works (P.) Ltd., : 198 ITR 297, held that when proceedings under Section 147 of the Act are initiated the proceedings are opened only qua the items of under assessment. The finality of assessment proceedings on other issues remains undisturbed and it makes no difference whether the assessment proceedings have become final on account of framing of an assessment under Section 143(3) of the Act or on account of non-issue of a notice under Section 143(2) of the Act within the stipulated period. The Supreme Court held, that the assessing officer could only assess or reassess the escaped income in respect of which proceedings under Section 147 of the Act have been initiated, but, also any other income chargeable to tax, which may have escaped assessment and which comes to his knowledge, subsequently, in the course of such proceedings. 12. Admittedly, in the instant case, it is not the case of the assessing authority that during the course of proceedings under Section147 of the Act it came across any material relating to the payment of commission suggesting escapement of income under any of the heads. On the other hand, the Ist Appellate Authority has given a categorical finding that the assessee had claimed as expenditure the commission of Rs. 58,59,913/- in his Trading and Profit and Loss Account and the same was available on the record. Consequently, in the absence of any information having been received by the assessing officer regarding escapement of commission income during the course of proceedings under Section 147 of the Act, he could not have formed an opinion on this issue that it has escaped assessment. Consequently, in the absence of any information having been received by the assessing officer regarding escapement of commission income during the course of proceedings under Section 147 of the Act, he could not have formed an opinion on this issue that it has escaped assessment. Further, the reasons to believe does not record the factum of escapement of commission. The aforesaid decision of the Supreme Court in Sun Engineering (supra) was followed in Vipin Khanna v. Commissioner of Income-Tax and others, : 255 ITR 220 which is fully applicable in the instant case. 13. In the light of the aforesaid, we are of the opinion, that the Ist Appellate Authority was justified in deleting the addition of commission, on the ground, that it was not covered by the reasons recorded under Section 148 (2) of the Act. The Tribunal was justified in upholding the order of the Ist Appellate Authority. 14. In the light of the aforesaid, the appeal filed by the Department fails and is dismissed. The question of law is answered in favour of the assessee and against the Department.