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TMI Blog1936 (10) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... t at all assessed in the year 1934-1935, was the Income-tax Officer justified in taking action in the following year under S. 34 of the Act to assess the said income which had escaped assessment ? In spite of the absence of authority, I do not feel any doubt as to how the question should be answered. The material facts are these. The year of assessment is the year ending 31st March 1935, and the previous year ended on 31st March 1934. No notice was served on the assessee under Section 22, sub-s. (2), during the year of assessment, but on 24th June 1935, a notice was served on the assessee under S. 34, alleging that her income for the year of assessment had escaped assessment. Under Section 3 of the Income-tax Act, a tax is charged in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assess or re-asses such income, profits or gains, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section. There is no doubt in this case that the assessee had income, profits or gains chargeable to income-tax, but it is said that the income, profits or gains had not escaped assessment within S. 34, because no assessment had ever been started and therefore there was no assessment to escape. Reliance is placed by the assessee on a dictum of Sir George Rankin in In re Lachhiram Basantal AIR 1931 Cal. 545. There the learned Chief Justice said as follows (p. 912 of 58 Cal.) :- Section 34 deals with income which has escaped assessment and it may be, though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34 what must be escaped is assessment and that means the whole process of assessment, which, in the case of individuals, starts with the service of a notice under S. 22(2). The liability to assessment is a risk to which every person in British India entitled to income is liable, and I cannot see why the process of assessment has not been just as much escaped by a person who receives no notice under Sec. 22(2) as by a person who receives such a notice which proves in fact ineffective. It seems to me that a person who receives no notice under S. 22(2) has escaped assessment, although through no fault of his own, the process of assessment has never been set in motion. It is argued by Sir Jamshedji Kanga on behalf of the assessee that the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er S. 23. He says that in that case the expression 'escape assessment' used under S. 34 cannot apply, and that the expression is only appropriate when an individual has been assessed in respect of his total income but for some reason or other part of the income chargeable to the tax was in fact not so charged. Sec. 34 is in these terms : If for any reason income, profits or gains chargeable to income tax has escaped assessment in any year or has been assessed at too low a rate, the Income Tax Officer may, at any time within one year of the end of that year, serve on the person liable to pay tax on such income, profits or gains or in the case of a company, on the principal officer thereof, a notice containing all or any of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection is S. 22, which starts the machinery by which the assessable income of an individual or a company has to be determined. Sub-S. (2) of S. 22 provides that the Income tax Officer shall serve a notice upon a person, whose total income is in his opinion of such an amount as to render him liable to income tax, to furnish a return in the prescribed form, of his total income. Sec. 23 empowers the Income tax Officer to assess the total income of the individual and determine the amount of the tax payable by him. Therefore it is clear that every individual in this country, whose total income is of such an amount as to render him in the opinion of the Income tax Officer liable to income tax is exposed to the risk of being assessed to the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eminent Judges, must be limited, unless there is a very strong indication to the contrary, to the facts which they had before them. Apart from this, I think, when their Lordships said that the expression 'has escaped assessment' is not equivalent to 'has not been assessed', all that their Lordships intended to mean is that as in that case the course of the assessment 'had not been completed, and no final order of assessment was made it could not be said that income had 'escaped assessment.' If this dictum means what the learned counsel says it does, then their Lordships would not have made the following observations at the end of the same paragraph. This is what they say (p. 16 of 61 I.A.) It may be that if ..... X X X X Extracts X X X X X X X X Extracts X X X X
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