1988 (8) TMI 142

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....t was completed and the assessee had gone in appeal before the CIT(A) who had since disposed of the appeal by the assessee for the asst. yr. 1981-82 on 25th Jan., 1985, whereas the CIT has passed an order under s. 263 on 31st March, 1986. It is, however, seen that the issue raised by the CIT on the basis of which he has revised the order of the Assessing Officer, was a different one which was not before the CIT(A) nor dealt with by him. Briefly speaking, the facts of the case were as follows: 3. The CIT acting under s. 263 noticed that the order of assessment made by the Assessing Officer was erroneous and prejudicial to the interest of Revenue. Hearing was given to the assessee, but there was no compliance. The CIT mentioned that r. 6AA w....

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.... so, the AAC should be deemed to have examined these issues and agreed with the ITO and even that portion of the assessment order is merged with that of the AAC. This issue before the Special Bench was regarding the applicability of s. 263 in respect of orders of assessment which was subjected to appeal by the assessee before the AAC. In other words, there was a total merger of assessment order in its entirety with the order of the appellate authority. But subsequent to that decision there were other decisions of different High Courts in which, inter alia, it was held that the points not being agitated before the AAC or decided by him, did not merge with the order of the AAC. In this connection, we may refer to the decision of the Hon'ble M....

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....he doctrine of fusion or merger is based in the principle that there cannot be, at one and at the same time, more than one operative order governing the matter. It was also held that when a merger was merely taken into consideration, but no final decision is rendered by the appellate authority, the ITO is competent to rectify any mistake under s. 154(1A) as there exists no final decision of the appellate authority which prohibits rectification by the ITO and, therefore, in the absence of a final decision by the appellate authority even mistakes can be rectified by the ITO. 5. Thus, having regard to the entirety of the facts and circumstances of the case, as briefly mentioned above, the point of warehousing maintenance was not before the CI....

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....s urged, therefore, that on the facts of the case, it cannot be said that the Assessing Officer had not made proper enquiries as alleged by the CIT in respect of the expenditure warehousing maintenance outside India. 8. It is also the appeal by the assessee that the CIT exceeded his jurisdiction in passing the order under s. 263, as mentioned by us above. It is vehemently urged by the assessee's learned counsel that the facts are very clear to show that there was no error in the order of assessment much less to interest of the Revenue so as to authorise the CIT to initiate proceedings under s. 263. According to the assessee's learned counsel, the Assessing Officer made various enquiries before passing the assessment order which is quite lo....