Doctrine of merger does not bar reassessment where Section 150 saves notice issued to give effect to appellate directions.

Section 150 of the Income-tax Act, 1961 can save reassessment notices issued under Section 148 even where ordinary limitation under Section 149 has expired, if the reassessment is to give effect to a finding or direction in an appellate or revisional order. The doctrine of merger of the appellate order with the Tribunal's order does not by itself prevent implementation of such directions. The restriction in Section 150(2) applies only where the reassessment was already time-barred when the original assessment order was passed; on the stated facts, that bar did not apply, so the reopening notices were treated as within limitation.

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Issues: Whether notices issued under Section 148 of the Income-tax Act, 1961 for reopening assessment for the assessment years 2003-04 to 2005-06 were barred by limitation on the ground that the appellate order had merged with the Tribunal's order, so as to exclude the operation of Section 150 of the Income-tax Act, 1961.

Analysis: The writ petitions turned on the interplay between the doctrine of merger and the statutory saving contained in Section 150 of the Income-tax Act, 1961. The Court held that mere merger of the Commissioner of Income Tax (Appeals) order with the Tribunal's order did not prevent implementation of the appellate directions. Section 150(1) permits a notice under Section 148 notwithstanding the limitation in Section 149 when reassessment is to give effect to a finding or direction in an appellate or revisional order. Section 150(2) restricts this only where the reassessment itself was already time-barred when the original order was made. On the facts, that restriction was not attracted.

Conclusion: The reopening notices were held to be within the saving provision of Section 150 and not barred by limitation.

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