Law: Income Tax Act, 1961

Section: 263

(a) Income-tax-----Revision---Powers of CIT---Doctrine of merger of order of Assessing Officer in order passed on appeal---Matter remanded by CIT (Appeals) to Assessing Officer---Another Assessing Officer passing fresh order---No merger of fresh order of Assessing Officer in order of CIT (Appeals)---Fresh order of Assessing Officer could be revised---Indian Income Tax Act, 1961, 5.263. (b) Income-tax--- ----Revision---Scope of 5.263---Law applicable---Effect of amendment by Finance Act, 1989---Amendment is retrospective in nature---Indian Income Tax Act, ,1961, S.263---[J. K. Synthetics Ltd. v. Addl. CIT (1976) 105 ITR 344 (All.) dissented from]. The principle of merger applies to income-tax cases, the same will apply only where a decision reached by an inferior authority has been reversed, modified or even confirmed by the Appellate Authority. But the said principle will not apply where a decision of an inferior authority does not come in for consideration by the Appellate Authority and there is no decision of the Appellate Authority either by way of affirmance or by way of reversal or modification on the point decided by the inferior authority. This is made clear by Explanation (c) to section 263(1) of the Income Tax Act, 1961. The Explanation was substituted by the Finance Act, 1988, with retrospective effect from June 1, 1988,: and clause (c) of the Explanation was amended by the Finance Act, 1989, but the amendment is retrospective in nature (with effect from June 1, 1988) as is clear from the reading of the said Explanation. It also includes an appeal filed on or before or after June 1, 1988, as is clear from the aforesaid Explanation: Held, that, in the instant case, the Commissioner of Income-tax (Appeals) had not decided the question whether the assessee was entitled to the deduction under section 35B, but remanded the said question, to the Income-tax Officer for a decision. Therefore, the decision on the question by another Income-tax Officer was a fresh decision and the same could not be said to have merged with the order of the Commissioner (Appeals). Against such fresh decision of the Income-tax Officer, the Commissioner of Income¬tax could…

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