MESSRS CHATTURAM HORILRAM LTD. vs COMMISSIONER OF INCOME TAX, BIHAR AND ORISSA.

The Supreme Court held that the fresh notice issued under Section 34 of the Indian Income Tax Act, 1922 was valid as the income in question was chargeable to income tax according to the provisions of Sections 3 and 4 of the Act. The Court clarified that this was a case of chargeable income escaping assessment, not mere non-assessment, due to a prior invalid assessment caused by a legal lacuna. The assessment set aside by the Income Tax Appellate Tribunal was upheld, confirming the retrospective applicability of the Indian Finance Act of 1939 as per Bihar Regulation IV of 1942.