Law: Income Tax Act, 1922

Section: 23(3),34,24

Income-tax Act, 1922 -Section 34 -- Reassessment -Escaped income -Assessing officer cognisant of the fact of construction of building while making original assessment -Quantum of investment not disclosed by assessee -Original assessment made without taking into account income from building -Income, whether escaped assessment -Held yes -Reassessment proceedings, whether legal -Held yes -- Escaped income, what is -Re-assessment proceedings when valid in law -- JUDGMENT The judgment of the court was delivered by MUSHTAQ HUSSAIN J.}.---The income of Dr. Khurshid Alam Malik, a medical practitioner of Sheikhupura, for the years 1955-56 to 1958-59 was the subject-matter of assessment under Section 23(3)/34 of the Income-tax Act before the Income-tax Officer, Sheikhupura. He made the assessment vide his order dated 25-2-1961. The assessee felt aggrieved on a number of counts including that the I.T.O. did not have the power to initiate proceedings under section 34 of the Income-tax Act. He filed an appeal which was disposed of by the Appellate Assistant Commissioner of Income-tax, Lahore, by his order dated 13-4-1964. On the particular point referred to hereinbefore with particular relation to the residential bungalow constructed by the assessee, the learned Appellate Assistant Commissioner probably came to the conclusion that the I.T.O. had the power in the present case to proceed under Section 34 because he only reduced the assessment by Rs. 5,750 for each of the years under review which could have been done only if he had, in fact, come to the conclusion that the order was intra vires. So far as the cost of the bunglow is concerned, he accepted the I.T.O's estimate of Rs. 64,500 which was based on a certificate from the S.D.O. Building & Roads of Public Works Department as against the amount of Rs. 42,290 assessed by an unqualified Overseer of the Municipal Committee, Sheikhupura. He, however, accepted the contention of the assessee that the S.D.O's certificate was on the basis of rates prevailing in 1961 whereas the building had been constructed in the year 1957-58. The learned Appellate Authority, therefore, reduced the assessment made by the S.D.O. by Rs.…

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