Rectification jurisdiction under the repealed income-tax law applied to pre-1961 returns; a wrong statutory label could not confer power.

Where returns were filed before commencement of the Income-tax Act, 1961, rectification proceedings relating to those assessments continued to be governed by the repealed 1922 Act under the saving provision in section 297(2)(a). The court applied the substance-over-form principle and held that the validity of a rectification action depends on its true statutory basis, not merely the section cited. On that footing, the Income-tax Officer could proceed only under section 35 of the Indian Income-tax Act, 1922, and not under section 154 of the 1961 Act. Because the appeal before the Tribunal was itself incompetent, the reference arising from it was also held incompetent.

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Issues: Whether rectification of assessments relating to pre-commencement returns could be made under section 154 of the Income-tax Act, 1961, or only under section 35 of the Indian Income-tax Act, 1922, and whether the reference was competent.

Analysis: The assessment years were governed by returns filed before the commencement of the 1961 Act, so the saving provision in section 297(2)(a) preserved the old Act for proceedings for assessment, including rectification. The Court applied the principle that the validity of a notice or order depends on its substance and legal basis, not merely on the section number mentioned. It followed the settled view that rectification proceedings in such cases form part of the assessment proceedings under the repealed Act. On that footing, the Income-tax Officer could act only under section 35 of the 1922 Act and not under section 154 of the 1961 Act. The Court further held that, since the appeal before the Tribunal itself was not competent, the reference founded on that appeal was also incompetent.

Conclusion: The rectification could be made only under section 35 of the Indian Income-tax Act, 1922, not under section 154 of the Income-tax Act, 1961, and the reference was not maintainable.

Final Conclusion: The statutory saving provision controlled the rectification jurisdiction for the relevant assessment years, and the court declined to answer the reference because the appellate proceedings giving rise to it were incompetent.

Ratio Decidendi: Where returns were filed before the commencement of the 1961 Act, rectification proceedings relating to those assessments continue under the 1922 Act by virtue of section 297(2)(a), and an order made under the wrong statutory label is judged by its substance only if the underlying jurisdiction otherwise exists.

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