Transitional construction of reassessment provisions saved pre-1962-63 notices and defeated the limitation objection.

Reassessment notices for pre-1962-63 assessment years were treated as saved by the transitional scheme, because section 297(2)(d)(ii) permits resort to section 148 subject to sections 149 and 150. Section 150(1) was construed mutatis mutandis, so earlier appellate and reference orders passed under the repealed 1922 Act could operate for continuity under the 1961 Act. That reading avoided an artificial distinction between cases governed by the two Acts and preserved the reassessment machinery. The notices were therefore not barred by limitation, and the objection that the proceedings were time-barred failed.

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Issues: Whether reassessment notices issued under section 148 of the Income-tax Act, 1961, for pre-1962-63 assessment years were barred by limitation, or whether section 150(1), read with the transitional provisions in section 297(2)(d)(ii), saved the proceedings despite the earlier appellate and reference orders having been passed under the Indian Income-tax Act, 1922.

Analysis: The scheme of section 297(2)(d)(ii) permits reassessment for escaped income in pre-1962-63 years by resort to section 148, subject to sections 149 and 150. Although section 150(1), literally read, refers to findings or directions contained in orders passed by an authority in proceedings under the 1961 Act, the Court held that the transitional context requires a mutatis mutandis construction. A rigid literal reading would create an artificial and discriminatory anomaly between cases where the underlying appellate or reference order was passed under the 1961 Act and cases where the same kind of order was passed under the repealed Act, even though the reassessment machinery itself is invoked under the new Act. The Court also relied on the deeming and saving effect of section 297(2)(k) to treat the earlier orders as corresponding orders under the new Act for the limited purpose of continuity. The earlier authorities cited by the assessee were distinguished as not controlling the present limitation question.

Conclusion: Section 150(1) was held to apply, with the necessary transitional modifications, so as to save the reassessment proceedings and remove the bar of limitation. The contention that the notices were time-barred failed.

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