Reassessment notices under the later income-tax law failed where earlier proceedings were already pending and saving provisions did not apply.

Reassessment notices issued under section 148 of the Income-tax Act, 1961 were treated as invalid where reassessment proceedings had already been commenced and were pending under section 34(1)(b) of the Indian Income-tax Act, 1922. The later Act could not be used to initiate a fresh notice-based proceeding in that situation, and section 150(1) did not apply because the relied-on finding or direction must arise from an order under the 1961 Act, not the earlier enactment. The proviso to section 34 of the 1922 Act also could not assist the Revenue, as no proceeding had been initiated under it. The notices were therefore quashed.

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Issues: Whether notices issued under section 148 of the Income-tax Act, 1961 were valid when reassessment proceedings had already been initiated and were pending under section 34(1)(b) of the Indian Income-tax Act, 1922, and whether section 150(1) of the Income-tax Act, 1961 could justify those notices.

Analysis: The proceedings for reassessment had been commenced under the 1922 Act before the 1961 Act came into force and were still pending when the impugned notices were issued. In such a situation, the officer could not invoke section 148 of the 1961 Act to start a fresh notice-based proceeding. Section 150(1) also did not assist the department because it applies only where the finding or direction relied upon is contained in an order passed under the 1961 Act, whereas the appellate order in question was made under the earlier enactment. The suggested reliance on the proviso to section 34 of the 1922 Act was not available, as no proceeding had been initiated under that proviso.

Conclusion: The notices under section 148 of the Income-tax Act, 1961 were invalid and were rightly quashed.

Final Conclusion: The assessee succeeded because the reassessment notices were without authority in view of the pending proceedings under the earlier Act and the inapplicability of the saving provision relied upon by the Revenue.

Ratio Decidendi: Where reassessment proceedings are already pending under the repealed income-tax law, a fresh notice under the later Act is incompetent unless the later Act itself clearly authorises such action; a saving or transitional provision cannot be used unless its statutory conditions are strictly satisfied.

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