Reassessment under section 34 permitted where a firm's completed assessment supplied information that a partner's share was omitted.

Whether an income-tax reassessment of a partner can be opened under section 34 turns on satisfying the information-and reason-to believe requirements of section 34(1)(b); where a firm's subsequently completed assessment furnished information that a partner's previously assessed share was understated, those statutory conditions were met and reassessment was permissible. The court held that the specific adjustment provision in section 35(5) does not operate retrospectively to cover assessments finalized before 1 April 1952, so it did not bar action under section 34; the petition seeking prohibition was dismissed with costs.

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Issues: Whether, in a case where a partner's assessment was provisionally made before 1 April 1952 and the firm's completed assessment later showed a larger share, the Income-tax Officer could re-open and reassess the partner's income under section 34 of the Indian Income-tax Act, 1922.

Analysis: The question turns on the statutory requirements of section 34 as amended and the applicability of section 35(5). Section 34(1)(b) requires that the Officer have information in his possession and reason to believe that income chargeable to tax has escaped assessment or has been under-assessed; the amended provision does not require a prior-style 'discovery' as formerly construed. The later completed assessment of the firm furnished information that the partner's share had not been correctly included in the partner's earlier assessment. Section 35(5), which deals specifically with adjustments following firm assessments, was held by this Court to be not operative with retrospective effect to cover assessments completed before 1 April 1952; therefore section 35(5) does not govern the present facts. Given the information from the firm's assessment, both statutory conditions of section 34(1)(b) were satisfied permitting action under section 34.

Conclusion: The Income-tax Officer was entitled to proceed under section 34 of the Indian Income-tax Act, 1922 to reassess the partner's income; the writ petition seeking prohibition is dismissed with costs.

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