Saving provision for pending reassessment proceedings upheld as valid classification under Article 14.

Section 297(2)(d)(i) of the Income-tax Act, 1961, was examined as a saving provision preserving reassessment proceedings already initiated by notice under section 34 of the repealed Act. The Court applied Article 14 classification principles and held that proceedings commenced by service of notice under section 34 form a distinct class of pending matters, capable of valid legislative preservation on repeal. It further held that such classification has a rational nexus with the statutory scheme and that no unconstitutional discrimination arises merely because the repealed and repealing enactments differ in their overall incidence. The provision was therefore upheld as valid and consistent with Article 14.

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Issues: Whether section 297(2)(d)(i) of the Income-tax Act, 1961, which saves reassessment proceedings already initiated by notice under section 34 of the repealed Act, is discriminatory and violative of article 14 of the Constitution.

Analysis: The saving provision was examined on the footing that reassessment proceedings commenced by service of notice under section 34 of the Income-tax Act, 1922, constitute pending proceedings and may be treated as a separate class from cases where no such notice had issued. The Court applied the settled article 14 principle that classification is permissible if it rests on an intelligible differentia having a rational nexus with the object of the statute. It held that the issue and service of notice under section 34 mark the initiation of reassessment proceedings, that such proceedings may validly be preserved on repeal, and that pending proceedings can be legislatively singled out for continuation under the law under which they began. The Court further held that the comparison between the repealed and repealing enactments did not establish that the old law was, as a whole, more onerous in a manner that attracted article 14.

Conclusion: Section 297(2)(d)(i) of the Income-tax Act, 1961, is not discriminatory, does not offend article 14, and is valid.

Ratio Decidendi: Pending reassessment proceedings initiated under a repealed taxing statute may be validly classified as a separate group and continued under the old law if the classification is based on the existence of pending proceedings and bears a rational relation to the statutory scheme.

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