Court rules original assessment not merged with subsequent order, deeming amendment invalid. Revenue wins appeal.

The Court held that the original assessment under Section 143 (1) did not merge with the subsequent order under Section 143 (3) (b) after being set aside. As a result, the order passed under Section 155 to amend the assessment under Section 143 (1) was deemed invalid. The Court ruled in favor of the revenue, concluding that there was no completed assessment for income escaping assessment to be taxed under Section 155. The income tax appeal was disposed of accordingly.

---

---

Issues:
Validity of order u/s. 143 (3) (b) and u/s. 155 - Merger of original order u/s. 143 (1) - Income escaping assessment - Power of assessing officer under Section 147.

Analysis:
The case involves a reference made by the Commissioner of Income Tax, Kanpur, regarding the validity of the order under Section 143 (3) (b) and the subsequent order under Section 155 for the assessment year 1980-81. The primary question of law referred to the Court was whether the ITAT was justified in holding that on the cancellation of the order under Section 143 (3) (b), the original order under Section 143 (1) did not survive, and thus, the order passed under Section 155 amending the assessment under Section 143 (1) was invalid.

The assessment in question was originally completed under Section 143 (1) of the Income Tax Act. Subsequently, the Assessing Officer initiated action under Section 143 (2) (b), and the assessment under Section 143 (3) (b) was completed. The Appellate Assessment Commissioner (AAC) held that the assessment under Section 143 (3) (b) was invalid but noted that the original assessment under Section 143 (1) was open to rectification under Section 155 of the Act.

The ITAT confirmed the AAC's order canceling the assessment under Section 143 (3) (b) and observed that the issue of whether the original assessment under Section 143 (1) survived was debatable. The Court considered judgments such as Chatturam Horilram Ltd. v. CIT and Asstt. Commissioner of Income tax v. Rajesh Jhaveri Stock Brokers Private Ltd. to determine the legal principles applicable in the present case.

The Court held that the order under Section 143 (1) did not merge with the order under Section 143 (3) (b) after it was set aside by the AAC. If income had escaped assessment due to the cancellation of the order under Section 143 (3) (b), a notice under Section 155 could be issued for amending the assessment. However, since the assessment under Section 143 (3) (b) was set aside, there was no completed assessment for income escaping assessment to be taxed under Section 155.

Based on the above analysis, the Court answered the question of law in favor of the revenue and against the assessee, thereby disposing of the income tax appeal accordingly.

---