Commissioner of Income Tax vs Saraf Bandhu Pvt. Ltd.

V.A. Mohta, J.—The following question is raised in this reference :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the order of the Commissioner of Income Tax u/s 263 of the Income Tax Act, 1961, was without jurisdiction and was bad in law? "

The material assessment year is 1976-77. The Income Tax Officer had allowed set-off of carried forward losses of the earlier years 1974-75 and 1975-76 as determined on February 14, 1979, by the Income Tax Officer in those assessment years. The appeal against the order dated February 14, 1979, was decided by the Commissioner of Income Tax (Appeals) on November 19, 1979. The Commissioner of Income Tax, in exercise of revisional jurisdiction u/s 263, by his order dated February 10, 1981, set aside the order of the Income Tax Officer dated February 14, 1979, on the ground that while allowing the set-off of carried forward losses he should have redetermined the figures of losses to be set off. The Tribunal quashed the order of the Commissioner dated February 10, 1981. The Tribunal did not agree with the submission made on behalf of the assessee that the order of the Commissioner was without jurisdiction inasmuch as on the day of exercise of revisional power the Income Tax Officer''s order had merged in the order of the Commissioner of Income Tax. The Tribunal, however, came to the conclusion that there was no justification for the exercise of revisional jurisdiction, since the Income Tax Officer had made the assessment on February 14, 1979, on the basis of the binding appellate order passed by the Commissioner of Income Tax (Appeals) dated November 19, 1979. The Tribunal applied the ratio of the decision of the Calcutta High Court in the case of Russell Properties Pvt. Ltd. Vs. A. Chowdhury, Addl. Commissioner of Income Tax and Others, .

We notice a catena of decisions rendered by this court as well as the Supreme Court taking the view that once the original order goes in appeal and the appeal is decided, the original order ceases to exist since it merges in the appellate order and hence the original order cannot be revised under the revisional jurisdiction. [See Commissioner of Income Tax Vs. P. Muncherji and Company, ] , Ritz Ltd. and another Vs. Union of India and others, , COMMISSIONER OF Income Tax Vs. INTERNATIONAL COMPUTERS INDIAN MANUFACTURE LTD., , Santoshi Tel Utpadak Kendra Vs. Deputy Commissioner of Sales Tax and another, and Khandelwal Ferro Alloys Ltd. v. State of Maharashtra [1991] 80 STC 42 (Bom).

Under the circumstances, we record the answer to the question in the affirmative and in favour of the assessee. No order as to costs.