The main legal point established is that the calling for the records by the Commissioner constituted a proceeding, and the proceedings were pending in connexion with the exercise of his powers of revision u/s 33(1), thus empowering the Commissioner to set aside the Appellate Assistant Commissioner's order.

JUDGMENT

Gentle, J. - The applicant, Baijnath Bajoria applied for registration of his firm on 24th August 1940. The income tax Officer refused registration. The assessee carried the matter to the Appellate Assistant Commissioner who allowed the appeal and on 23rd December 1940, directed registration. On 21st January 1941 the Commissioner of income tax, purporting to act under the provisions of Section 33(1), income tax Act, in force at the time, called for the records of the proceedings relevant to the registration of the firm. On 21st February 1941, obviously with the intention of exercising his revisional jurisdiction, subject to what representations might be made on behalf of the assessee, the Commissioner directed notice to be given to him. On 3rd March 1941 the assessee appeared through learned advocate. Finally, on 17th April 1941, the Commissioner passed an order which in effect reversed the order of the Appellate Assistant Commissioner and restored the decision of the income tax Officer who had refused registration. The relevant matters which transpired during the period covered by the facts related above are that on 18th January 1941 there was a notification that on 25th January 1941, Part 2, income tax (Amendment) Act of. 1939 would come into force. The effect of that Act coming into force was that the Commissioner's powers in revision u/s 33(1) disappeared and other powers, to which reference is not necessary, were substituted. The first question upon which reference is made to this Court thus arises. That question is as follows:

Whether in the facts and circumstances of the case the Commissioner was empowered in law to set aside the Appellate Assistant Commissioner's order in view of the fact that Part 2, income tax (Amendment) Act, had come into force with effect from 25th January 1941?

2. There is a second question to which no answer is sought either by the assessee applicant or by the Commissioner and reference to it is not necessary. Section 33, income tax, as it appeared before 25th January 1941, was as follows:

(1) "The Commissioner may of his own motion call for the record of any proceeding under this Act which has been taken by any authority subordinate to him....

(2) On receipt of the record the Commissioner may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may pass such orders thereon as he thinks fit:

Provided that he shall not pass any order prejudicial to an assessee without hearing him or giving him a reasonable opportunity of being heard.

3. This section disappeared on 25th January 1941. It was however in force on 21st January 1941 when the Commissioner called for the records. Although it does not so appear in the case, it has been stated and accepted that, the records in fact arrived on 5th February 1941. It is argued on behalf of the assessee that since the powers of the Commissioner u/s 33(1) had gone by the time the records arrived and when he gave consideration to them, the Commissioner had no authority to pass any order and the order which he has passed is null and void. The sole question for decision is whether the calling for the records which the Commissioner is empowered to do u/s 33(1) is a proceeding. Section 14, income tax (Amendment) Act of 1940 provides:

Notwithstanding the coming into force of Part II of the Indian income tax (Amendment) Act, 1939....

(b) All proceedings then pending before the Commissioner in connexion with the exercise of his powers of revision u/s 33 ... may be continued and disposed of as if the said Part II had not come into force.

4. On behalf of the assessee it if argued that there was no proceeding by or on behalf of the Commissioner until the records had reached him in response to his call and he had given consideration or disposal to them. Consequently, it was contended that since there was no proceeding until that period arrived, which was after 25th January 1941, when Part 2 of the 1939 Act had come into force, the