1992 (11) TMI 76 - HC - Income Tax

Limitation on Commissioner's Jurisdiction post-appeal clarifies doctrine of merger

The court held that after an appeal is decided by the Appellate Assistant Commissioner, the Commissioner's jurisdiction under section 263 is limited to ... Appeal To AAC, Effect Of Amendment Of S. 263, Revision Issues involved:The judgment deals with the issue of whether the Commissioner, after an appeal against an assessment has been decided by the Appellate Assistant Commissioner, loses jurisdiction under section 263 of the Income-tax Act, 1961.Details of the Judgment:The case involved the assessment year 1975-76 where the Income-tax Officer completed the assessment of the assessee under section 143(3) of the Act. The Appellate Assistant Commissioner later modified this assessment. Subsequently, the Commissioner issued a notice under section 263, deeming the assessment order prejudicial to the Revenue. The assessee argued that the order had merged with the Appellate Assistant Commissioner's decision, but this was rejected by both the Commissioner and the Tribunal.The question referred to the court was whether the Tribunal erred in upholding the setting aside of the assessment by the Commissioner under section 263. The issue revolved around the doctrine of merger, with conflicting views from various High Courts. The Supreme Court's observations in previous cases were cited to highlight the complexity of the matter.One view held that once the Appellate Assistant Commissioner decides the appeal, the Commissioner loses jurisdiction under section 263. This was supported by judgments from High Courts like Allahabad and Bombay. However, the opposite view, as seen in cases from Madhya Pradesh and other High Courts, argued that the Commissioner's revisional jurisdiction under section 263 could still apply to aspects of the assessment not covered by the appellate order.To resolve the conflicting views, an amendment was introduced in the Income-tax Act in 1988, further amended in 1989, which clarified the extent of the Commissioner's powers under section 263. The court analyzed this amendment and the interpretations given by different High Courts to determine the scope of the Commissioner's jurisdiction post-appeal decision.The court ultimately held that after an appeal has been decided by the Appellate Assistant Commissioner, the Commissioner's jurisdiction under section 263 is limited to issues not addressed in the appeal. The judgment clarified the extent of the doctrine of merger and the Commissioner's powers in revising assessment orders post-appeal.