Reassessment under escaped income notice may include additional items once validly initiated on definite information.

Section 34 of the Indian Income-tax Act was construed as a machinery provision allowing reassessment on definite information that income had escaped assessment, and not as confining the proceeding to the particular item that first triggered the notice. A notice issued on one escaped item could therefore extend to other escaped income discovered within the reassessment, because the expressions "definite information," "discovers," and "such income" were read broadly and practically. The Income-tax authorities were accordingly entitled to include additional escaped items in the reassessment.

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Issues: Whether, when a notice is issued under section 34 of the Indian Income-tax Act on the basis of a particular item of escaped income, the Income-tax authorities may include other items of escaped income in the reassessment.

Analysis: Section 34 was construed in its pre-1948 form as a machinery provision intended to enable the Income-tax Officer to proceed upon definite information that income had escaped assessment. The expressions "definite information", "discovers" and "such income" were read in a broad and practical sense, not as limiting reassessment to the single item that initially brought the section into operation. The notice was held to be a notice of reassessment of escaped income generally, and not a notice confined to one isolated source or item merely because that item first came to the Officer's knowledge. The restriction contended for would unduly narrow the section and frustrate its purpose.

Conclusion: The answer was in the affirmative. The Income-tax authorities were entitled to include other items of escaped income in the reassessment under section 34.

Final Conclusion: The reference was answered in favour of the Revenue, and the assessee was directed to pay costs.

Ratio Decidendi: A notice under section 34 of the Indian Income-tax Act is not confined to the exact item of escaped income which first prompted the proceedings; once validly set in motion on definite information, the reassessment may extend to other escaped items within its scope.

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