Reassessment jurisdiction requires a bona fide belief of escaped income; ongoing enforcement of prior assessments defeats that basis.

Reassessment under section 34(1A) of the Indian Income-tax Act, 1922 required the Income-tax Officer to hold a reasonable and bona fide belief that income had escaped assessment. Because the revised assessment orders for the relevant years were still being enforced, recovery proceedings continued, and the assessee's properties remained under attachment, the revenue could not consistently claim that no effective assessment existed or that the earlier orders were cancelled. On those facts, the requisite belief could not be formed on the date of the notices, so the reassessment proceedings were invalid and without jurisdiction.

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Issues: Whether proceedings under section 34(1A) of the Indian Income-tax Act, 1922 could validly be initiated when revised assessment orders for the same years were still being enforced and recovery proceedings continued, so that the Income-tax Officer could be said to have reason to believe that income had escaped assessment.

Analysis: The jurisdiction under section 34(1A) depended on the existence of a reasonable and bona fide belief that income chargeable to tax had escaped assessment. The earlier revised assessment orders had not been treated as cancelled by the revenue, recovery proceedings founded on them were still being pursued, and the assessee's properties remained under attachment. In those circumstances, the revenue could not consistently contend that it believed the earlier assessments were ineffective or that no assessment existed. On the material available, the Income-tax Officer could not reasonably have believed that income had escaped assessment on the date of the notices.

Conclusion: The initiation of proceedings under section 34(1A) was invalid and without jurisdiction. The answer to the referred question was in the negative and against the revenue.

Final Conclusion: The reference was answered in favour of the assessee, holding that the reassessment notices were not legally sustainable on the facts and circumstances existing when they were issued.

Ratio Decidendi: Reassessment jurisdiction can be invoked only where, on the facts then existing, the assessing authority can reasonably and bona fide believe that taxable income has escaped assessment; where the department itself continues to enforce the earlier assessments, such belief cannot be sustained.

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