Doctrine of merger limits rectification power after appellate confirmation of an assessment order

Once an assessment order is carried in appeal and confirmed, the original order merges in the appellate order and ceases to exist independently. On that principle, section 154 permits rectification only by the authority that can amend the subsisting order; the Income-tax Officer could not rectify a section 23A order after appellate confirmation. The rectification proceedings were therefore without jurisdiction.

---

---

Issues: Whether, after an order of the Income-tax Officer under section 23A had been confirmed in appeal, the Income-tax Officer could invoke section 154 of the Income-tax Act, 1961 to rectify that order on the ground of a mistake apparent from the record.

Analysis: Section 154 empowers the Income-tax Officer to amend only an order passed by him, while the power to amend an appellate order is vested in the appellate authority. Once the assessment order was carried in appeal and confirmed, the original order ceased to have a separate existence and merged in the appellate order. On that principle, the only authority competent to rectify the order was the appellate authority, not the Income-tax Officer who made the original assessment order. The appellate decision had dealt with the computation of the distributable surplus and expressly confirmed the section 23A order, so the rectification proceedings initiated by the Income-tax Officer were without jurisdiction.

Conclusion: The proceedings under section 154 initiated by the Income-tax Officer were without jurisdiction and the writ petition succeeded.

---