Points to note:

i. In the first step, the ^-NH₂ takes the most acidic proton - where the resultant anion can be stabilised both by the N⁺ and by the phenyl ring (see here for the resonance stabilisation of benzylic anions).

ii.From this anion no rearrangement can occur - however, step 2 shows a small equilibrium that is present and as the anion on the right goes through with the rearrangement, the eqm is pulled through until all the compound has rearranged.

iii. The tautomerism labelled in step 4 will occur because the ring is returned its aromaticity - energetically favourable.

Points to note:

i. The actual rearrangement step is labelled - it is important to note that it is always the group trans to the oxygen which migrates.

ii. After the rearrangement a simple amide hydrolysis follows.

iii. Note also that the chiral group on the oxime retains its configuration throughout the rearrangement.