Rectification under the Income-tax Act, 1961 remained valid for legacy assessments, and the resulting order was appealable.

Rectification proceedings arising from an assessment originally made under the Indian Income-tax Act, 1922 could validly be taken under section 154 of the Income-tax Act, 1961 where the fresh assessment and rectification order were passed after the 1961 Act came into force. Applying section 297 as construed in earlier authority, the High Court held that continuation of pending proceedings did not require the Income-tax Officer to act only under the repealed Act. The rectification order was therefore within jurisdiction and was an appealable order. The objection to the maintainability of the appeal had not been raised before the first appellate authority and had no practical significance once the appeal was entertained and decided on merits.

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Issues: Whether rectification proceedings arising out of an assessment originally made under the Indian Income-tax Act, 1922 could validly be proceeded with under section 154 of the Income-tax Act, 1961, and whether the appeal before the Appellate Assistant Commissioner was incompetent for that reason.

Analysis: The assessment history showed that the original assessment and reassessment belonged to the regime of the 1922 Act, but the fresh assessment giving effect to the Tribunal's earlier order and the subsequent rectification order were both passed after the Income-tax Act, 1961 had come into force. The Court applied the construction of section 297 of the 1961 Act adopted in earlier authority and held that the provisions enabling continuation of pending proceedings did not compel the Income-tax Officer to proceed only under the repealed Act. The Officer had jurisdiction to rectify under section 154 of the 1961 Act, and the order so passed was an appealable order. Since the departmental objection to maintainability had not been raised before the first appellate authority and the appeal had been entertained and decided on merits, the reference on competence of the appeal ceased to have practical significance.

Conclusion: The rectification order was validly made under the Income-tax Act, 1961, the appeal before the Appellate Assistant Commissioner was maintainable, and the reference did not call for an answer against the assessee.

Final Conclusion: The Court declined to answer the referred question and left undisturbed the assessee's success on the jurisdictional issue.

Ratio Decidendi: Where pending or continued income-tax proceedings can lawfully be taken under the Income-tax Act, 1961, the Income-tax Officer is not bound to proceed under the repealed Act merely because the original assessment arose under it, and a rectification order so made remains appealable.

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