Reassessment notice under income-tax law can start on bona fide information without a prior hearing or quasi-judicial enquiry.

Section 34 of the Indian Income-tax Act, 1922 was treated as part of the reassessment machinery, not a charging provision, so a prior quasi-judicial enquiry with notice and hearing before issuing notice was not required. The absence of express powers in that section to summon the assessee or compel evidence indicated that the Income-tax Officer could act on bona fide satisfaction formed from available information that income had escaped assessment or been under-assessed. Requiring an additional pre-notice enquiry would duplicate the procedure already provided under Sections 22 and 23, where the assessee would have a statutory opportunity to produce evidence after reassessment proceedings began. The officer could therefore validly initiate action on good-faith information.

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Issues: Whether proceedings under Section 34 of the Indian Income-tax Act, 1922 could be initiated on the Income-tax Officer's good-faith belief based on available information that income had escaped assessment, or whether a prior quasi-judicial enquiry with notice and hearing to the assessee was a condition precedent.

Analysis: Section 34 was treated as part of the assessment machinery rather than a charging provision. The absence of express powers in that section to convene the assessee or compel evidence before issuing notice indicated that a prior quasi-judicial enquiry was not contemplated as a prerequisite. A construction requiring two enquiries on the same subject matter would duplicate the procedure already provided under Sections 22 and 23, under which the assessee would have a statutory opportunity to produce evidence after reassessment proceedings commenced. The workable construction was therefore preferred, and the Income-tax Officer's bona fide satisfaction on the information before him was enough to initiate action under Section 34.

Conclusion: A prior quasi-judicial enquiry and hearing were not necessary before initiating proceedings under Section 34; the Income-tax Officer could validly begin reassessment proceedings if, on the information before him and in good faith, he considered that income had escaped assessment or been under-assessed.

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