Escaped assessment under section 34 extends to income never assessed because no notice was served

Income chargeable to tax can "escape assessment" under section 34 of the Income-tax Act, 1922 even where no notice under section 22(2) was served and the assessment process never began. The court read section 34 as remedial machinery covering not only omissions from an existing assessment but also cases where income liable to tax was never brought to assessment at all. On that construction, the absence of any prior assessment did not bar resort to section 34, and the reference was answered in favour of the Revenue.

---

---

Issues: Whether section 34 of the Income-tax Act, 1922 could be invoked where no notice under section 22(2) had been issued and no assessment had been made in the relevant year, so that the income had not previously been assessed at all.

Analysis: The judgment held that "escaped assessment" in section 34 is wide enough to cover not only income omitted from an existing assessment, but also a case where the assessment machinery was never set in motion because no notice under section 22(2) was served. The charging provision makes all previous-year income liable to tax, section 22(2) initiates the assessment process for individuals, and section 34 supplies the remedial machinery where income chargeable to tax has not in fact been brought to assessment. The prior authorities did not decide the precise question, and the reference to the Privy Council was treated as leaving this point open.

Conclusion: Section 34 was applicable even though no notice under section 22(2) had been issued and no assessment had previously been made; the question was answered in the affirmative in favour of the Revenue.

Ratio Decidendi: Income chargeable to tax "escapes assessment" within section 34 of the Income-tax Act, 1922 even where the assessment process was never commenced by notice under section 22(2).

---