Reassessment on later information upheld where a firm's subsequent assessment showed escaped income in a partner's completed assessment.

Later assessment of a firm can constitute information enabling the Income-tax Officer to believe that a partner's income had escaped assessment, so reassessment under section 34(1)(b) of the Income-tax Act, 1922 was supportable on that basis. The earlier pre-amendment authorities on section 34 were treated as inapplicable because the amended provision did not require the former concept of discovery. A reliance on section 35(5) also failed, as that provision did not apply to assessments completed before 1 April 1952; the partner's assessment had already been completed earlier. The challenge to the notice therefore failed and reassessment was allowed to continue.

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Issues: Whether notice and reassessment under section 34(1)(b) of the Income-tax Act, 1922 could be sustained on the basis of later assessment of the firm and whether section 35(5) excluded the applicability of section 34 in the case of a partner's completed assessment.

Analysis: The later assessment of the firm supplied the Income-tax Officer with information showing that part of the partner's income had escaped assessment, and the statutory requirement of reason to believe based on information in possession was satisfied. The earlier authorities on the pre-amendment language of section 34 were held inapplicable because the amended provision did not require the earlier concept of discovery. The argument based on section 35(5) also failed because that provision was not effective in relation to assessments completed before 1 April 1952, whereas the petitioner's assessment had been completed earlier.

Conclusion: Section 34(1)(b) applied and the challenge to the notice failed.

Final Conclusion: The writ petition was not maintainable on the merits and the reassessment proceedings were allowed to continue.

Ratio Decidendi: Where later information shows that income has escaped assessment, section 34(1)(b) permits reassessment if the Officer has reason to believe based on that information, and a later, inapplicable special provision does not bar such action.

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