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Issues: (i) Whether proceedings under section 34 of the Income-tax Act, 1922 were pending at the commencement of the Income-tax Act, 1961 so as to attract section 297(2)(d)(i) or exclude section 297(2)(d)(ii); (ii) Whether section 297(2)(d)(ii) of the Income-tax Act, 1961 revived the power to issue a notice under section 148 where the right to reopen the assessment had already become barred under the repealed Act.
Issue (i): Whether proceedings under section 34 of the Income-tax Act, 1922 were pending at the commencement of the Income-tax Act, 1961 so as to attract section 297(2)(d)(i) or exclude section 297(2)(d)(ii).
Analysis: A reassessment proceeding under section 34 of the repealed Act commences only when notice is served on the assessee. A notice merely issued but not validly served does not create pending proceedings. Where the appellate authority has held the service invalid and the notice remains unserved, the reassessment proceeding cannot be treated as pending at the commencement of the new Act.
Conclusion: No pending proceedings under section 34 of the Income-tax Act, 1922 existed at the commencement of the Income-tax Act, 1961.
Issue (ii): Whether section 297(2)(d)(ii) of the Income-tax Act, 1961 revived the power to issue a notice under section 148 where the right to reopen the assessment had already become barred under the repealed Act.
Analysis: A saving clause is construed as preserving existing rights and proceedings, not as reviving a remedy that had already become barred by lapse of time under the earlier law. General words in the repealing and saving provision are insufficient to confer retrospective effect unless such intention is expressed clearly or necessarily implied. The substituted machinery in sections 147 to 151 can be used only where the right to reopen survived at the date of repeal, and not where it had already been extinguished under the old Act.
Conclusion: Section 297(2)(d)(ii) did not revive a barred right to reopen the assessment, and the notice under section 148 was without jurisdiction.
Final Conclusion: The reassessment notice could not be sustained under the repealing and saving provisions, and the petitioner succeeded in obtaining quashing of the impugned notices.
Ratio Decidendi: A saving provision in a repealing statute preserves only subsisting reassessment rights and pending valid proceedings; it does not revive a right to reopen an assessment that had already become barred under the repealed law.
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