Definite information and bona fide belief can sustain reassessment notice where income appears to have escaped assessment.

A notice under section 34 was upheld where the assessment records showed a substantial increase in the assessee's capital accounts and the Income-tax Officer treated that as definite information suggesting under-assessment. Jurisdiction did not depend on the ultimate correctness of the assessee's explanation or on the final outcome of reassessment; it was sufficient that the officer honestly and in good faith believed income had escaped assessment. The absence of the original order recording issue of notice did not invalidate the proceedings because the surrounding assessment and appellate materials disclosed the basis for the belief. The notice was therefore held valid.

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Issues: Whether notice issued under section 34 of the Indian Income-tax Act was validly issued on the basis of definite information and a bona fide belief that income had escaped assessment.

Analysis: The assessment records showed a marked increase in the capital accounts of the assessee's concerns between the relevant Samvat years, and that difference was treated by the Income-tax Officer as definite information indicating under-assessment. The validity of jurisdiction under section 34 did not depend on the ultimate correctness of the assessee's explanation or on the final result of the reassessment proceedings. It was enough that, on the information available, the Income-tax Officer honestly and in good faith believed that income had escaped assessment. The absence of the original order recording the issue of notice did not defeat the proceeding, because the surrounding assessment orders and appellate findings showed the nature of the information before the officer.

Conclusion: The notice under section 34 was validly issued, and the question was answered against the assessee and in favour of the Revenue.

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