Reassessment notice upheld where successor officer discovered original assessment error and escapement of income justified reopening.

A reassessment notice under section 34(1)(b) of the Indian Income-tax Act, 1922 was upheld where a successor Income-tax Officer discovered that the original assessment had wrongly applied section 24(2), causing escapement of income. The court treated the later discovery of that assessment error as sufficient information to reopen the assessment, and held that the power is not confined to the officer who made the original order. It further noted that the materials did not justify interference under Article 226 of the Constitution. The notice was therefore sustained and the challenge failed.

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Issues: Whether a reassessment notice could be sustained under section 34(1)(b) of the Indian Income-tax Act, 1922 when a successor Income-tax Officer discovered that the original assessment had wrongly applied section 24(2), and whether interference under Article 226 of the Constitution of India was warranted.

Analysis: The earlier assessment had proceeded on a mistaken application of section 24(2), resulting in escapement of income. The discovery of that mistake furnished the requisite information for action under section 34(1)(b), and the provision does not confine such action to the very officer who made the original assessment. A succeeding officer may act on noticing the omission or error of the predecessor, because information for reopening is not limited to facts unknown during the original assessment and may arise from later discovery of an assessment mistake. In these circumstances, the challenge to the notice did not present a clear case for the extraordinary jurisdiction under Article 226.

Conclusion: The reassessment notice was valid and the challenge failed, against the assessee and in favour of the Revenue.

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