It's definitely a No1 Mk3 rear sight that has been modified.
What interests me is that the peep portion of this sight is made from the elevation slider and lock. Not only did the maker drill through both of these to make the aperture, but they also built up the underside of the slider since it normally has quite a deep groove in it to clear a screw head.
Does the knurled nut on the left still work for vertical adjustments, as well as the button on the right? There must be almost nothing left of the elevation slider lock with all that material removed for the aperture. They're darn small to begin with:
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