Discovery of omitted income under tax law sustained where corrected view of existing facts justified additional assessments.

Section 125 of the Income Tax Act, 1918 was construed as permitting a valid discovery where the surveyor, on reconsidering the same materials, correctly identified an omitted charge to tax; the provision was not confined to new facts in the narrow sense. A prior mistaken view of the facts did not bind a successor or the Crown, and there was no estoppel against the Crown. On the facts, the trustees' interest was contingent rather than vested, so the income had been omitted from the original assessments and additional assessments were sustainable.

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Issues: Whether the surveyor had "discovered" within the meaning of section 125 of the Income Tax Act, 1918 that income chargeable to tax had been omitted from the first assessments, so as to justify additional assessments, even though the earlier view had been based on a mistaken understanding of the facts and involved a change of opinion.

Analysis: The statutory language was construed as referring to the discovery of an under-assessment or omitted charge, and not merely to the discovery of new facts in the narrow sense. A discovery may arise from re-examination of the same materials and from a corrected view of their legal effect. The earlier Inspector's view did not bind his successor or the Crown, and there was no estoppel against the Crown. On the facts, the trustees' interest was contingent, not vested, so the income had been omitted from assessment and the surveyor had found that omission.

Conclusion: The surveyor had made a valid discovery within section 125, and the additional assessments were sustainable. The appeal succeeded.

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