1987 (2) TMI 57 - HC - Income Tax

Assessment orders not merged with appellate orders under Income-tax Act: High Court ruling

The High Court of Orissa held that there was no merger of assessment orders with appellate orders for the relevant assessment years. The Court upheld the ... Appellate Orders, Revision Issues:1. Merger of assessment order with appellate orders under section 263 of the Income-tax Act, 1961.Analysis:The High Court of Orissa dealt with a case involving the question of whether there was a merger of assessment orders with appellate orders, thus impacting the jurisdiction of the Commissioner to cancel assessments under section 263 of the Income-tax Act, 1961. The case pertained to a partnership firm for assessment years 1971-72, 1972-73, 1973-74, and 1974-75. The Appellate Tribunal remanded the matter to the Income-tax Officer for fresh assessments after accepting certain results shown by the assessee. The Income-tax Officer made reassessments, which were later set aside by the Commissioner under section 263 on grounds of being erroneous and prejudicial to Revenue interests. The assessee challenged the Commissioner's order before the Tribunal.For the assessment year 1973-74, similar errors were found by the Commissioner in the assessment made by the Income-tax Officer, leading to the setting aside of the assessment order and directions for a fresh assessment. The facts for the assessment year 1974-75 were akin to 1973-74, with the assessee filing an appeal against the Commissioner's order before the Tribunal.The main contention before the Tribunal was whether the Commissioner had the jurisdiction under section 263 for the first three assessment years due to the merger of orders. The Revenue argued that the Income-tax Officer had not considered the Tribunal's directions, making the orders prejudicial to Revenue interests. The Tribunal opined that the assessments were made casually and were prejudicial to Revenue interests, justifying the Commissioner's intervention.Regarding the question of merger, the Tribunal clarified that the original orders, including appellate orders, were set aside by the Tribunal, and fresh orders were passed by the Income-tax Officer post the remand. The High Court held that the theory of merger did not apply since the original orders were set aside, and the Commissioner had the authority to revise the fresh orders under section 263. The Court ruled in favor of the Revenue, stating that the assessee's argument lacked substance both factually and legally.In conclusion, the High Court upheld the Commissioner's actions under section 263, dismissing the assessee's contentions. The assessee was directed to pay the costs of the references to the Revenue, with a hearing fee assessed at Rs. 450.The judgment was delivered by Chief Justice H. L. Agarwal and Justice R. C. Patnaik, concurring with the decision.