Law: Income Tax Act, 1922

Section: 34

Income-tax Act (XI of 1922)---S. 34--Escaped income, what is--Re-assessment proceedings when valid in law. If an item of income is included in the return submitted by an assessee during a tax year but is left unassessed by the Income-tax Officer, or if assessed in the first instance the assessment is cancelled by any appellate or revisional authority, it is escaped assessment within the meaning of section 34 and the assessee can be legally served with a notice within one year of the end of that year. Section 34 is applicable to cases in which either no assessment at all has been made upon the person who received the income profits or gains liable to assessment, or where an assessment has been made in the course of the year, but some portion of the income, profits or gains of such assessee for some reason or other has not been included in the order of assessment; such income is income which has escaped assessment in the year, and falls within the ambit of section 34 of the Act. Amir Singh-Sher Singh v. Commissioner of Income-tax (1935) 3 I T R 171; Madan Mohan Lai v. Commissioner of Income-tax, Punjab and N.W.F.P. (1935) 3 I T R 438 arid Commissioner of Income-tax, Burma v. N. N. Burjorjee 131 IC _07 ref. JUDGMENT 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…

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