v. The respondent \Vas carrying on business as an excise con- J<. N. Gurusuxony tractor in the Civil and Military Station of Bangalore in the State of Mysore, called the retroceded area. The jurisdiction over this area was originally exercised by the Governor-General in Council by virtue of an agreement with the Maharaja of Mysore, and the income-tax law applicable was the Indian Income-tax Act, 1922. On July 26, 1947, the retroceded area was given back to the State of Mysore but the income-tax law in force in that area prior to that date continued to have effect and be operative till June 30, 1948, on which date was promulgated the Mysore Income-tax Act and Excess Profits Tax (Application to the Retroceded Area) (Emergency) Act, 1948, the effect of which was that the Indian Income-tax Act, 1922, stood repealed and the Mysore Income-tax Act, 1923, came into force subject to certain saving provisions. On August 5, 1948, was prom11lgated the Retroceded Area (Application of Laws) Act, 1948. Between 1947 and 1950 there were political and constitutional changes which ultimately resulted in Mysore becoming a Part B State within the Constitution of India. · The legal effect of these changes was that the income-tax law applicable to the retroceded area till June 30, 1948, was the Indian Income-tax Act, 1922 ; from July l, 1948, the Mysore Income-tax Act, 1923, became applicable except that the Indian Income-tax Act continued to apply in respect of the total income chargeable to income-tax in the retroceded area prior to July l, 1948, and the provisions of that Act as in force in the retroceded area prior to that date applied to all proceedings relating to the assessment of such income upto the stage of assessment and determination of income-tax payable thereon. This position continued till April I, 1950, when the Finance Act, 1950, came into force and as a result the Indian Income-tax Act, 1922, became applicable again to the retroceded area, subject to the saving provisions of s. 13(1) of the former Act. In respect of the assessment for the four years between 1945 and 1949, the respondent was assessed to income-tax under the law then in force in that area; subsequently, in 1954 the Income-tax Officer served a notice on the respondent under s. 34 of the Indian Income-tax Act, 1922, for the purpose of assessing "escaped" or "under-assessed.. income chargeable to income-tax for the said years. The respondent challenged the jurisdiction of the Income-tax Officer to take pro- ceedings under s. 34 or to make an order of re-assessment on the grounds inter alia (1) that s. 34 of the Indian Income-tax Act, 1922, was not saved bys. 13(1) of the Finance Act, 19501 because what was saved was the prior law "for the purposes of the • "levy, assesS~ent and collection of income-tax", ""·hich expres- sion did not inclpde re-assessment proceedings, (2) that the
