Mandatory reassessment notice and limitation under section 34 cannot be waived by filing a voluntary return.

Section 34 notice was treated as a mandatory jurisdictional prerequisite for reassessment and could not be waived by an assessee merely by filing a return before assessment. The filing of a return under section 22(3) was described as enabling only, and it did not authorise reassessment without the statutory notice. On the scope of section 34, the text distinguishes cases where no return was filed in time, which may fall under section 34(1)(a), from cases based on later information after a true and full return, which fall under section 34(1)(b). Section 22(3) was said not to enlarge limitation or override the reassessment scheme.

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Issues: (i) Whether the requirement of notice under section 34 could be waived by the assessee by filing a voluntary return before completion of assessment; (ii) whether section 34(1)(a) or section 34(1)(b) was attracted where no return had been filed within time under section 22(1) and returns were filed later before assessment.

Issue (i): Whether the requirement of notice under section 34 could be waived by the assessee by filing a voluntary return before completion of assessment.

Analysis: The notice contemplated by section 34(1) was held to be a jurisdictional step and a condition precedent to proceedings under that provision. Jurisdiction could be created only by statute and not by consent or acquiescence, so the assessee's act of filing a return did not dispense with the statutory notice. The filing of a return under section 22(3) was treated as merely enabling and did not authorise an assessment under section 34 without compliance with the notice requirement.

Conclusion: The requirement of notice under section 34 could not be waived by the assessee.

Issue (ii): Whether section 34(1)(a) or section 34(1)(b) was attracted where no return had been filed within time under section 22(1) and returns were filed later before assessment.

Analysis: Where no return was filed within the prescribed time, the matter could fall within section 34(1)(a) because income had escaped assessment due to omission to furnish a return. But once a voluntary return was filed before assessment and before expiry of the relevant period, income could not be said to have escaped assessment merely because the return was pending. Section 34(1)(b) applied only where income had already escaped assessment notwithstanding a true and full return and later information came to the Income-tax Officer. Section 22(3) did not enlarge the limitation for assessment and section 34(3) was construed accordingly.

Conclusion: Section 34(1)(a) applied only where the statutory conditions of escape from assessment were satisfied, and section 34(1)(b) applied only in cases of subsequent information after a true and complete return; on the facts, the assessments could not be sustained on waiver alone.

Final Conclusion: The reference was answered against the Revenue on the waiver point and the applicability of section 34 was confined to the statutory conditions stated by the Court, resulting in relief to the assessee.

Ratio Decidendi: A notice required by section 34 is a mandatory jurisdictional prerequisite that cannot be waived by the assessee, and section 22(3) does not extend or override the limitation scheme governing reassessment.

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