Permissive construction of section 297(2)(a) upheld maintainability of appeal against a rectification order.

Section 297(2)(a) of the Income-tax Act, 1961 was construed as permissive, not mandatory, so it merely enabled the Income-tax Officer to proceed under the 1922 Act where appropriate and did not require every pre-1961 return case to be dealt with under that Act. A rectification order made under section 154 of the 1961 Act remained valid on that basis, and it was not necessary to recharacterise it as an order under section 35 of the 1922 Act. On that footing, an appeal against the rectification order was maintainable.

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Issues: Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that no competent appeal lay before the Appellate Assistant Commissioner against the rectification order passed by the Income-tax Officer.

Analysis: The controversy turned on the construction of section 297(2)(a) of the Income-tax Act, 1961. The language used in that clause is permissive, not mandatory, and therefore merely enables the Income-tax Officer to proceed under the Indian Income-tax Act, 1922, in appropriate cases; it does not compel him to do so in every case relating to a return filed before commencement of the 1961 Act. The rectification order in the present case was in fact made under section 154 of the 1961 Act, and it was not necessary to treat it as an order under section 35 of the 1922 Act in order to sustain its validity. Since the order was one passed under the new Act, the appeal against it was maintainable.

Conclusion: The Tribunal was not justified in dismissing the appeal as incompetent. The question was answered in the negative and in favour of the assessee.

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