Rectification under the repealed income-tax law survives where notice and hearing are given, and a wrong statutory reference is not fatal.

Saved rectification proceedings under the repealed Income-tax Act, 1922 were preserved by section 297(2) of the Income-tax Act, 1961. A notice referring to section 154 of the 1961 Act did not by itself defeat jurisdiction where the assessee had notice, participated in the proceedings, and suffered no prejudice; the defect was treated as an irregularity, not a fatal jurisdictional error. Rectification under section 35 of the 1922 Act remained confined to mistakes apparent from the record, but the record could extend beyond the assessment order to the material used in making the assessment. On the facts noted, the alleged error was within rectification power and the challenge to relief under article 226 failed.

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Issues: (i) Whether a notice issued under section 154 of the Income-tax Act, 1961 invalidated rectification proceedings relatable to section 35 of the Income-tax Act, 1922 and deprived the revenue of jurisdiction; (ii) Whether the rectification was impermissible as being beyond the record and therefore outside section 35 of the Income-tax Act, 1922.

Issue (i): Whether a notice issued under section 154 of the Income-tax Act, 1961 invalidated rectification proceedings relatable to section 35 of the Income-tax Act, 1922 and deprived the revenue of jurisdiction.

Analysis: The saved operation of assessment proceedings under section 297(2) of the Income-tax Act, 1961 preserved proceedings under the repealed 1922 Act. Rectification formed part of the assessment process, and the requirement of notice under section 35 of the 1922 Act was treated as a requirement of opportunity and not as the source of jurisdiction itself. The assessee had notice of the proposed enhancement, participated in the proceedings, and raised no objection before the revenue. A notice referring to section 154 of the 1961 Act was therefore treated as, at worst, an irregularity and not a fatal jurisdictional defect.

Conclusion: The notice did not invalidate the rectification proceedings, and the objection to jurisdiction failed.

Issue (ii): Whether the rectification was impermissible as being beyond the record and therefore outside section 35 of the Income-tax Act, 1922.

Analysis: Rectification under section 35 of the 1922 Act is confined to mistakes apparent from the record, but the record is not limited narrowly to the assessment order alone and may include the material on which the assessment was made. The objection that the revenue relied on material outside the assessee's record was not properly pressed before the revenue authorities. In the circumstances found, the alleged mistake was within the scope of rectification contemplated by the statute.

Conclusion: The rectification was not shown to be beyond the record, and this challenge also failed.

Final Conclusion: The rectification orders were upheld, and the assessee was not entitled to relief under article 226.

Ratio Decidendi: In saved proceedings under the repealed income-tax law, rectification jurisdiction continues under the old Act where the assessee is given notice and a reasonable opportunity of being heard, and a notice referring to the corresponding provision of the later Act does not by itself nullify the proceedings absent prejudice or denial of opportunity.

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