Saving clause preserved a pre-1962 penalty notice under the old income-tax law for proceedings under the new Act.

A notice issued under section 28(3) of the Indian Income-tax Act, 1922 could be preserved under section 297(2)(k) of the Income-tax Act, 1961 and treated as a valid notice for penalty proceedings under the 1961 Act. The saving clause was construed broadly to continue notices, orders and other acts taken under the repealed Act, provided they were not inconsistent with the corresponding provisions of the new Act. Because the earlier notice was a ministerial step in penalty proceedings and the old and new penalty provisions were substantially in pari materia, the notice remained effective. The referred question was answered in the negative, in favour of the Revenue.

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Issues: Whether a notice issued under section 28(3) of the Indian Income-tax Act, 1922 could be deemed to have been issued under the corresponding provisions of the Income-tax Act, 1961 by virtue of section 297(2)(k), so as to validly initiate penalty proceedings under the 1961 Act.

Analysis: The assessment year was prior to 1 April 1962, but the assessment was completed after that date, attracting section 297(2)(g) of the Income-tax Act, 1961 and making the penalty proceedings liable to be governed by the 1961 Act. The decisive question was whether the earlier notice under section 28(3) of the repealed Act survived and operated under the new Act. Section 297(2)(k) was construed as a wide saving provision preserving notices, orders and other acts issued under the repealed Act, so far as they were not inconsistent with the corresponding provisions of the new Act. The Court held that a notice under section 28(3) was a ministerial step in penalty proceedings and fell within the amplitude of the saving clause. There was also no inconsistency between the old and new penalty provisions, as the relevant provisions were substantially in pari materia.

Conclusion: The notice under section 28(3) of the Indian Income-tax Act, 1922 was validly saved and treated as a notice under the corresponding provisions of the Income-tax Act, 1961, and the answer to the referred question was in the negative, in favour of the Revenue.

Ratio Decidendi: A notice or other procedural step taken under a repealed enactment may continue to operate under the successor Act where the saving clause is wide enough to cover it and the corresponding provisions are not inconsistent.

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