JUDGMENT

TULZAPURKAR, J.:— The point raised in this appeal by certificate seems to be covered by two decisions of this Court in favour of the assessee and hence we propose to dispose of the appeal by a short judgment.

2. The appellant, a firm, carries on business of manufacturing ice and preservation of potatoes in its cold storage. It was assessed to income-tax for the assessment year 1961-62 by an assessment order dated July 5, 1961 on a total income of Rs. 53, 548/-. In proceedings started on December 21, 1961 under Sec. 34 (1) of the Indian Income-tax Act, 1922 the Income-tax Officer found certain property income and income to the extent of one lakh from potato transactions put through in the name of benami persons by the assessee had escaped assessment and, therefore, by his order dated December 22, 1965 he brought them to tax . The said order of the Income-tax Officer was annulled by the Appellate Assistant Commissioner appeal on May 10, 1967 on the ground that the initiation of reassessment proceedings was not justified. The department allowed the matter to rest there and the Assistant Appellate Commissioners order became final. On July 14, 1967 the Income-tax Officer issued a notice under Section 148 of the Income-tax Act, 1961 in respect of the self-same assessment year after obtaining the section from the Commissioner of Income-tax. Admittedly, while seeking sanction for reopening the assessment under Section 147, the Income-tax Officer in his report categorically stated that the assessee had concealed the income of Rs. 1,00,000/- from undisclosed source on account of benami storage of potatoes in various names and the same had escaped assessment owing to the failure on the part of the assessee to disclose his income fully and truly. Pursuant to the notice the appellant filed a return under protest on August 14, 1967. The appellant challenged the notice by filing a writ petition in the Allahabad High Court, inter alia, on the ground that no reassessment proceedings could be undertaken under Sec. 147 of the 1961 Act inasmuch as in respect of the self-same escaped income proceedings under Section 34 (1) of the 1922 Act had been undertaken and were pending on April 1, 1962, when the 1961 Act came into force and in this behalf reliance was placed on Section 297 (2) (d) (ii) of the 1961 Act. The High Court rejected the contention on the ground that in order that section 297 (2) (d) (ii) should apply. The proceedings under section 34 of the 1922 Act must be legal proceedings with jurisdiction which was not the case here.

3. It is difficult to sustain this decision of the High Court in view of two decisions of this Court in view of two decisions of this Court in S. B. Jain v. Mahendra (1972) 83 ITR 104 and Gujar Mal Modi v. C. I. T. (1972) 84 ITR 261 where it has been held that S. 297 (2) (d) (ii) is concerned with the factual pendency of proceedings under Sec. 34 of the 1922 Act and not with their legality. It must in fairness be stated that none of these decisions on the proper construction of Section 297 (2) (d) (ii) had been rendered by this Court when the Allahabad High Court decided the matter.

4. In S.B. Jain v. Mahendra (supra) the Income-tax Officer had issued notice to the respondent-assessee on January 5, 1962 under Section 34 (1) (a) of the 1922 Act to reopen his assessment for the assessment year 1946-47. The High Court quashed the notice by its order dated March 6, 1963, on the ground that the notice was barred by limitation. In the meantime the 1961 Act came into force on April 1, 1962, whereafter the Income-tax Officer again issued a notice on March 26, 1963 under Section 148 of the 1961 Act. This Court held that what section 297 (2) (d) (ii) of the 1961 Act required was the factual pendency of a proceeding under section 34 of the repealed Act, on April 1, 1962. The question whether that proceeding was barred by limitation or not was irrelevant. Though the earlier proceeding was quashed for the reason that not