Doctrine of merger bars section 263 revision once the assessment order is absorbed into the first appellate order.

Once an assessment order has merged in the appellate order of the first appellate authority, the Commissioner cannot invoke revisionary jurisdiction under section 263 to revise that assessment order. The principle of merger removes competence to revise the original assessment order after the appellate decision has come into existence. On the stated facts, the section 263 order was treated as without jurisdiction and was cancelled in favour of the assessee.

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Issues: Whether the Commissioner could invoke revisionary jurisdiction under section 263 of the Income-tax Act, 1961 after the assessment order had merged in the order of the first appellate authority.

Analysis: The assessment order had already been decided in appeal by the first appellate authority. Once that appellate order came into existence, the original assessment order stood merged in it. In such circumstances, the Commissioner was no longer competent to revise the assessment order under section 263.

Conclusion: The order passed under section 263 was without jurisdiction and was cancelled, which was in favour of the assessee.

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