Law:

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Section 154 of the Income-tax Act, 1961 - Rectification of mistake - Apparent from records - Whether once an appeal against order passed by an authority is preferred and is decided by appellate authority, order of said authority merges into order of appellate authority and with that merger, order of original authority ceases to exist and order of appellate authority prevails - Held, yes - Whether when rectification order under section 154 is passed, it would mean that appeal effect order is rectified and limitation under section 154(7) would be calculated with reference to date of appeal effect order only - Held, yes Words and phrases : 'Order' as occurring in sub-section (7) of section 154 FACTS The Assessing Officer framed the assessment order under section 143(3) on 24-11-1998, making various additions. On appeal, the Commissioner (Appeals) gave partial relief to the assessee. The matter had gone to the Commissioner (Appeals) again and, therefore, orders recording appeal effects had to be passed three times. On 30-1-2006, the Assessing Officer issued notice under section 154 to the assessee stating that double deduction had been allowed on account of depreciation. The order under section 154 was passed on 26-4-2006. On appeal, the assessee contended that action on the part of the Assessing Officer was time-barred. However, the Commissioner (Appeals) confirmed the action of the Assessing Officer and dismissed the appeal. On second appeal, the Tribunal quashed the Assessing Officer's order on the ground that the same was barred by limitation. On the revenue's appeal : HELD In view of decision of the Supreme Court in the case of Hind Wire Industries Ltd. v. CIT [1995] 212 ITR 639/ 80 Taxman 79 , it follows that after the rectification order, initial order of assessment ceases to operate. It is no more in existence and is substituted by the fresh assessment order. The Court, thus, categorically held that the word 'any' in the expression 'order sought to be amended' would mean even the rectified order. [Para 14] Legal position with which there cannot be any quarrel is that once an appeal against the order passed by an authority is preferred and is decided by the…

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