Retrospective tax law information can support escaped assessment action under Section 34 despite earlier void proceedings.

Section 34 of the Indian Income-tax Act, 1922 was treated as wide enough to cover a later discovery that the relevant taxing law had been brought into force retrospectively. Earlier assessment proceedings were held void because the Finance Act, 1939 had not then extended to the area, but Bihar Regulation IV of 1942 later cured that position and gave the Income-tax Officer definite information that income had escaped assessment. On that basis, the second notice under Section 34 was not barred by the earlier invalid proceedings and was held to be validly issued.

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Issues: Whether the notice issued on 12 February 1944 under Section 34 of the Indian Income-tax Act, 1922, was validly issued for the assessment year 1939-40.

Analysis: The earlier assessment proceedings were held to be illegal and void because the Indian Finance Act of 1939 had not been extended to the relevant area at the material time. The subsequent promulgation of Bihar Regulation IV of 1942 brought the Finance Act into force retrospectively, and the Income-tax Officer acquired definite information of the legal position. That information was sufficient to support discovery that income chargeable to tax had escaped assessment. The expression "discovery" in Section 34 was treated as broad enough to include finding out the relevant state of law. The second notice under Section 34 was therefore not barred merely because earlier proceedings had been initiated and annulled.

Conclusion: The notice dated 12 February 1944 under Section 34 was validly issued.

Ratio Decidendi: Where earlier assessment proceedings are void for want of operative taxing law in the relevant area, later information that the law had been brought into force retrospectively constitutes definite information enabling action under Section 34 of the Indian Income-tax Act, 1922, if it reveals escaped assessment.

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