Malik, CJ. :- This is a reference under S. 66 (1), Income tax Act, relating to the assessment for three years, viz., 1940-41, 1941-42 and 1942-43. The three questions referred to us are as follows :

"1. Whether in the circumstance of the case, the issue of a notice under S. 34 for the assessment year 1940-41 was valid in law?

2. Whether in the circumstances of the case the action taken under S. 34 was based on discovery of any definite information within the terms of S. 34 of the Act.?

3. Whether, in the circumstances of this case, the IV Additional Income-tax Officer, E. P. T. Circle, Kanpur, had authority to make assessment without issuing fresh notices under Ss. 22 (4) and 23 (2) of the Act?"

2. The first two questions refer to the assessment year 1940-41 only. The assessment in that year was made by Mr. H.L. Giddens, Income-tax Officer, Gorakhpur, on 12-8-1940.

3. In the assessment year 1939-40, the assessee had made a number of entries of fictitious deposits and had inflated the purchase price of raw material purchased by him. The Income-tax Officer had, therefore, rejected the asaessees accounts, had made enquiries to find out the actual profits made by the assessee and had made the assessment on the basis thereof. In the assessment year 1940-41, with which we are concerned, there were, however, no such fictitious deposits entered in the books and most of the purchases of raw materials were made in cash and were supported by cash memorandums. Though the Income-tax Officer found that the profits shown were very low, being only 7½ per cent. he accepted the return and assesseed the tax on the basis thereof.

4. In the assessment year 1941-42, the successor of Mr. Giddens found that in the relevant account year there were again fictitious deposits amounting to a large sum of Rs. 1,22,000. This created a suspicion in the mind of the Income-tax Officer who compared the rates at which purchases had been made and found that the purchase prices of raw material given in the account books of the assessee were higher than those shown in the account books of other dealers. The Income-tax Officer then by further comparison found that in the account year relevant to the assessment year 1940-41 the prices at which the assessee had claimed to have purchased the raw material much higher than the prices paid by other similar dealers. On discovery of the fact that the rates relating to the previous year to the assessment year 1940-41, though they were supported by cash memorandums, had been inflated and the further fact that a large sum of money, even though not entered in his books in the previous year to the assessment year 1940-41, was entered as fictitious deposits in the next year, the Income tax Officer believed that a part of the income in the assessment year 1940-41 had escaped assessment. There upon he issued notice to the assessee under S. 34, Income-tax Act.

5. The statement of the case does not clearly set out the facts mentioned by us above and we had, therefore, to spend considerable time over this ease; but from the appellate order of the Tribunal read with the statement of the case it is clear that the definite information in possession of the Income tax Officer before he issued notice under S. 34 of the Act was as follows : (1) The rates of purchases shown in the books of account of the assessee and supported by cash memos for the assessment year 1940-41, were much higher than the rates shown in the books of other dealers; and (2) The assessse had a large sum of money totalling Rs. 1,22,000 which he showed in the accounts of the next year as deposits in the names of certain Khatiks which entries were wrong.

6. The point for decision, therefore, is whether definite information had come into the possession of the Income-tax Officer from which he could seasonably believe that a part of the income had escaped assessment and he could, therefore, issue notice to the assessee under S. 34 of the Act. The facts set out above along w