Reopening notice survived the old limitation period, allowing valid reassessment for escaped income under the 1961 Act.

Under the amended section 34(4) of the Indian Income-tax Act, 1922, the power to issue a reopening notice was treated as surviving even after the earlier eight-year limit, so the revenue's right to reopen had not become barred by 1 April 1962. On that basis, section 297(2)(d)(ii) of the Income-tax Act, 1961 applied, and a notice under section 148 could validly be issued for escaped income relating to the relevant assessment year. The Supreme Court decision in J. P. Jani was distinguished because it had not considered the effect of section 34(4).

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Issues: Whether reassessment under section 147 of the Income-tax Act, 1961, was invalid on the ground that the revenue's right to reopen the assessment had already become barred under section 34 of the Indian Income-tax Act, 1922, before the new Act came into force.

Analysis: The assessment year involved was 1947-48. The reopening notice was issued after the Income-tax Act, 1961 came into force, but the court examined the effect of section 34(4) of the Indian Income-tax Act, 1922, as amended, and the majority reasoning in S. C. Prashar. It held that sub-section (4) preserved the power to issue a notice even after the earlier eight-year limit had expired, and therefore the right to reopen had not become barred on 1 April 1962. On that footing, section 297(2)(d)(ii) of the Income-tax Act, 1961 applied, and a notice under section 148 could validly be issued for escaped income relating to the relevant assessment year. The Supreme Court decision in J. P. Jani did not govern the case because the effect of section 34(4) had not been considered there.

Conclusion: The reassessment under section 147 of the Income-tax Act, 1961 was valid, and the question referred was answered against the assessee and in favour of the Revenue.

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