Transitional tax law preserves appellate enhancement power under the repealed Act, not the new Act.

Where assessment proceedings were saved under the Income-tax Act, 1922 by the transitional provisions in section 297(2)(a) of the Income-tax Act, 1961, the connected appeal had also to proceed under the repealed 1922 Act. Enhancement jurisdiction in that appeal therefore arose under section 31(3)(a) of the 1922 Act, and the Appellate Assistant Commissioner could not invoke section 251(2) of the 1961 Act. A notice proposing enhancement under the 1961 Act was accordingly without jurisdiction.

---

---

Issues: Whether the Appellate Assistant Commissioner could invoke section 251(2) of the Income-tax Act, 1961 to initiate enhancement proceedings in an appeal arising from an assessment governed by the Income-tax Act, 1922.

Analysis: The return had been filed before the commencement of the Income-tax Act, 1961, so the assessment proceedings were required by section 297(2)(a) of that Act to continue as if the 1961 Act had not been enacted. The appeal against that assessment therefore had to be instituted and disposed of under the repealed Act in terms of paragraph 4 of the Income-tax (Removal of Difficulties) Order, 1962. Enhancement in such an appeal flowed from section 31(3)(a) of the Income-tax Act, 1922, and the Appellate Assistant Commissioner could not import the corresponding power under section 251 of the 1961 Act.

Conclusion: The notice proposing enhancement under section 251(2) of the Income-tax Act, 1961 was without jurisdiction and the petitioner succeeded.

Ratio Decidendi: Where assessment proceedings are saved under the repealed law by the transitional provisions, the connected appellate proceedings, including enhancement jurisdiction, must also be conducted under that repealed law and not under the repealing Act.

---