Law:

Section:

Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interest of revenue - Assessment years 1968-69 to 1970-71 - Whether that part of order of ITO which was not made subject-matter of appeal before AAC and which he had not examined, did not get merged in order of AAC and thus, Commissioner had jurisdiction to set aside said orders under section 263 - Held, yes FACTS The Commissioner while exercising powers under section 263 set aside the assessment order passed by the ITO. The assessee challenged the order of the Commissioner on the ground that the orders of assessment had merged in the appellate order of the AAC and, therefore, the Commissioner had no jurisdiction to revise the assessment because the said orders could not be considered to be the orders of the ITO. It was argued that though the issues before the AAC in appeal were different and not the points considered by the Commissioner in his order, still for the purpose of the Commissioner's jurisdiction, the order of the ITO should be held to have merged with the order of the AAC and could no longer be regarded as the orders of assessment made by the ITO. The Tribunal held that the Commissioner had no jurisdiction to exercise his power under section 263 because the orders of the ITO ceased to be his orders and got merged in the order of the AAC. On reference : HELD That part of the order of the ITO which was not made the subject-matter of appeal before the AAC by the assessee and which he had not examined did not get merged in the order of the AAC. There was a clear finding recorded by the Tribunal that the issues before the AAC in appeal were different and not the points considered by the Commissioner in his orders. As such, there was no merger of the order and, therefore, the Tribunal was not justified in holding that the Commissioner had no jurisdiction to pass an order under section 263. The order passed by the Tribunal was, therefore, not in accordance with law. The orders of the ITO had not merged in the order of the AAC and the Commissioner had jurisdiction to set aside the said orders under section 263. Note : The case was decided against the assessee. CASE REFERRED TO…

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