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Issues:
1. Interpretation of Section 34 of the Income Tax Act, XI of 1922 regarding the assessment of income that has escaped assessment. 2. Whether the absence of a notice under Section 22(2) during the year of assessment affects the applicability of Section 34 to assess the income that had not been assessed. Analysis: 1. The judgment by Sir F.W. Beaumont, CJ, and Rangnekar, J., addresses the interpretation of Section 34 of the Income Tax Act, XI of 1922. The central question raised in the case was whether the Income-tax Officer was justified in assessing the income of the assessee for the year ending 31st March 1934, which had not been assessed in the following year under Section 34. The court emphasized that the liability to assessment for an individual starts with a notice from the Income-tax Officer requiring the individual to make a return. In this case, as the assessee did not receive any notice during the year of assessment, the court held that the process of assessment had been escaped, even though it had not been initiated due to the absence of a notice under Section 22(2). The court rejected the argument that Section 34 could not apply in the absence of a notice under Section 22(2), stating that once the assessment starts with a notice under Section 34, all relevant provisions of the Act apply effectively, leading to the affirmation of the Income Tax Commissioner's view. 2. Rangnekar, J., in his agreement with the judgment, further elaborated on the interpretation of Section 34. He emphasized that the section allows for action by the Income Tax authorities when the income chargeable to tax has not been assessed or has been assessed at too low a rate. The judge highlighted the significance of Sections 3, 22, and 23 in the scheme of the Act, pointing out that every individual liable to income tax is exposed to the risk of assessment. In cases where no notice under Section 22(2) is issued, the individual can be said to have "escaped assessment" as assessment commences with the notice under that section. Rangnekar, J., also addressed the reliance on judicial dicta and previous cases, clarifying that the interpretation of the expression "escaped assessment" in Section 34 should not be limited to cases where there has been a previous assessment, but also encompasses cases where no assessment has occurred at all. The judge concluded that the provisions of the Act apply as if the notice under Section 34 was issued under Section 22(2), supporting the view that the assessee's income could be assessed under Section 34 despite the absence of a notice under Section 22(2). In conclusion, the judgment provides a comprehensive analysis of the interpretation of Section 34 of the Income Tax Act, emphasizing that the liability to assessment can be triggered even in the absence of a notice under Section 22(2) if the income has not been assessed. The court's decision affirms the applicability of Section 34 in cases where income has escaped assessment, regardless of the initiation of the assessment process through a notice under Section 22(2).
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