Definite information under income tax reopening can rest on circumstantial material if it supports an honest, reasonable belief.

Section 34 of the Indian Income-tax Act, 1922 was construed to require definite information, meaning material of a definite nature rather than mere suspicion, and to permit reopening only where the Income-tax Officer formed an honest and reasonable belief that income had escaped assessment. The Court held that certainty or direct proof was not necessary and that circumstantial material could be sufficient if it supported that belief. On the facts, falsification in the books, distrust of the explanation for prior records, and similar profit rates across years provided definite information, and the reopening was therefore valid.

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Issues: Whether, under Section 34 of the Indian Income-tax Act, 1922, the Income-tax Officer had definite information in consequence of which he discovered that the assessee's income for the relevant year had escaped assessment or been under-assessed.

Analysis: Section 34, as amended, was construed as requiring more than mere suspicion and as protecting the assessee against reopening on speculation. The words "definite information" were held to mean material of a definite nature, not necessarily direct evidence of the escape itself, and the word "discovers" was held to require an honest and reasonable belief based on material capable of supporting that belief. The Court held that certainty was not required, and that circumstantial material could suffice if it led the Income-tax Officer to a reasonable conclusion that income had escaped assessment. On the facts, the Officer had found falsification in the books for one year, had reason to distrust the explanation about prior books, and had before him the similarity of profit rates across the relevant years.

Conclusion: The Income-tax Officer had definite information within the meaning of Section 34 and had validly discovered that income for the earlier year had escaped assessment or been under-assessed.

Ratio Decidendi: For Section 34 of the Indian Income-tax Act, 1922, definite information may include circumstantial material that enables the Income-tax Officer to form an honest and reasonable belief that income has escaped assessment, and such discovery does not require certainty or direct proof.

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