S. NARAYANAPPA & ORS. vs COMMISSIONER OF INCOME-TAX, BANGALORE

The Supreme Court held that under Section 34(1) of the Income-tax Act, 1922, the Income-tax Officer has jurisdiction to issue a notice if he has reasonable grounds to believe that income has been under-assessed due to non-disclosure of material facts by the assessee. The Court clarified that the Officer's belief must have a rational connection to the facts and that the reasons for the belief need not be communicated to the assessee. The appeal was dismissed, affirming the High Court's decision that the Officer acted within his jurisdiction.