1991-VIL-617--DT
Equivalent Citation: [1992] 193 ITR 183, 103 CTR 178, 60 TAXMANN 123
ORISSA HIGH COURT
Date: 01.08.1991
COMMISSIONER OF INCOME-TAX
Vs
ORISSA OIL INDUSTRIES LIMITED
BENCH
Judge(s) : S. C. MOHAPATRA., S. K. MOHANTY
JUDGMENT
S. C. MOHAPATRA J. -This is a reference under section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue. The statement of facts has been made on the following two questions for answer :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the order of assessment being covered by the directions given by the Inspecting Assistant Commissioner could not be revised by the Commissioner under section 263 of the Act ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the entire assessment order merged with the appellate order of the Commissioner of Income-tax (Appeals) irrespective of any point not appealed against and as such the Commissioner had no jurisdiction to revise the assessment order under section 263 of the Act?"
The assessee is a company. It was being assessed by the Income-tax Officer for the assessment year 1976-77. As required under section 144B of the Act, before finalising the assessment, the draft assessment order was to be referred to the Inspecting Assistant Commissioner of Income-tax when directed to by the assessee and assessment is to be completed thereafter. Against the assessment order so passed, an appeal lies to the Commissioner of Income-tax (Appeals) who is the first appellate authority.
After the order of assessment was made under section 144B, the assessee preferred an appeal to the first appellate authority who allowed the appeal in part. Thereafter, the Commissioner of Income-tax exercised his power under section 263(1) of the Act revising the order of the Income-tax Officer. An appeal was preferred against the order of the Commissioner in revision. In the appellate order, the Tribunal held that the Commissioner of Income-tax has no jurisdiction to revise the order. The revenue filed an application for making a reference on the basis of which the Tribunal has stated a case on the aforesaid two questions.
Section 263 (1) as it stood at the relevant time read as follows :
"The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify . . . "
Mr. Amal Ray, learned standing counsel for the Department, submitted on behalf of the Revenue that the order of the Income-tax Officer can always be revised and, therefore, the Commissioner was justified in revising the same in exercise of his power under section 263(1) of the Act. Mr. A. Patnaik, learned counsel for the assessee, on the other hand, submitted that there was no order of the Income-tax Officer available to be revised since such order had merged in the first appellate order of the Commissioner of Income-tax (Appeals).
Mr. Ray is justified in commenting on the appellate order of the Tribunal in so far as the first question is concerned. Approval of the draft assessment order of the Assistant Commissioner is not an assessment order which is to be passed by the Income-tax Officer finally after receipt of approval. The Commissioner has power to revise the order of the Income-tax Officer and, while so revising, may also examine the correctness of approval. But, where an appeal has been filed against the order of assessment, such order merges with the appellate order and there is no scope for the Commissioner to revise the order of assessment made by the Income-tax Officer. The Tribunal is correct in its finding in this respect.
The doctrine of merger as laid down by the Supreme Court in S. S. Rathore v. State of Madhya Pradesh, [1989] 75 FJR 425 ; AIR 1990 SC 10, overruling the earlier decision of the Supreme Court in Sita Ram Goel v. Municipal Board, Kanpur [1958] AIR 1958 SC 1036, on this question supports our view.
In the result, the questions are answered against the Revenue. No costs.
S. K. MOHANTY J. -I agree.
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