The petitioner is a partnership firm which carries on business principally in footwear. It field its return of income for the previous year relevant to the assessment year 1960-61. The Income-tax Officer made an assessment order on March 31, 1965, under section 23(3) of the Income-tax Act, 1922. The petitioner preferred and appeal to the Appellate Assistant Commissioner of Income-tax. During the pendency of the appeal, the Appellate Assistant Commissioner issued a notice dated November 15, 1965, requiring the petitioner to furnish details of purchased and sales of imported commodities during the year of account. Certain other particulars were also required of the petitioner. The petitioner replied to the notice on November 25, 1965. Then followed a notice dated April 23, 1966, from the Appellate Assistant Commissioner to the petitioner informing the latter that it was proposed to enhance its assessment. This notice purports to have been issued under section 251(2) of the Income-tax Act of 1961. The petitioner applies for certiorari against the notice dated April 23, 1966, and the proceedings for enhancing the assessment.
There was considerable controversy between the parties as to the validity of the proceedings for enhancing the assessment. The contention of the petitioner that the proceedings for enhancement, including notice dated April 23, 1966, are without jurisdiction rests on a number of grounds. Upon consideration of the matter it appears to me unnecessary to enter into the controversy, because it seems to me that the Appellate Assistant Commissioner and this is also the position expressly assumed by him, has taken the proceedings under the purported exercises of power under section 251 of the Income-tax Act of 1961. And that provision, in my judgment does not apply to the instant case.
The return was field on June 6, 1960. That is what learned counsel for the petitioner says, and it is not disputed by learned counsel for the respondent. The Income-tax Act, 1961, came into force on April 1, 1962. Inasmuch as the return of income was field before the commencement of that Act, by virtue of section 297(2)(a) of that Act, proceedings for Assessment are required to be taken and continued as if that Act had not been passed. Accordingly, the assessment order made against the petitioner on March 31, 1965, must be considered to be an assessment order made under the Act of 1922, and that is exactly what the assessment order declares. Now there is nothing in section 297 of the Act of 1961 to indicate whether an appeal against such assessment is to be institute under the Act of 1922 or the Act or 1961. To remove this difficulty, the Central Government made the Income-tax (Removal of Difficulties) Order, 1962, paragraph 4 of which provides :
'4. Appeal, reference or revision proceedings in respect of orders passed under the repealed Act. - (1) Proceedings by way of the first or subsequent appeals, reference or revision in respect of any order made under the Indian Income-tax Act, 1922 (XI of 1922) (hereinafter referred to as the repealed Act), shall be instituted and disposed of as if the repealing Act had not been passed.'
It is clear that the appeal field by the petitioner before the Appellate Assistant Commissioner must be disposed of as if the Act of 1961 had not been passed. In other words, it must be disposed of in accordance with the provisions of the Act of 1922. The disposal of the appeal includes all the proceedings taken in the appeal by the Appellate Assistant Commissioner initiated by the Appellate Assistant Commissioner for enhancement of the assessment. The jurisdiction to enhance the assessment flows from section 31(3) (a) of the Act of 1922 and before enhancing the assessment the first proviso to section 31(3) requires the Appellate Assistant Commissioner to afford a reasonable opportunity to the petitioner of showing cause against such enhancement. The appellate Assistant Commissioner cannot rely upon the corresponding provisions of the Act of 1961. He cannot exercise the jurisdiction contemplated by section 251(a) of that Act and consequently the provision of section 251(2) do not come into play at all. The position taken by the Appellate Assistant Commissioner that he was entitled to exercise the jurisdiction conferred by the aforesaid provision of the Act of 1961 cannot be accepted. I am of opinion that the proceedings for enhancement of the petitioners assessment, including the notice dated April 23, 1966, issued under section 251(2) of the Act of 1961 are without jurisdiction.
The petition is allowed. The proceedings for enhancement of the petitioners assessment including the notice dated April 23, 1966, are quashed. The petitioner is entitled to its costs.