TMI Blog2017 (3) TMI 1244X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment in Hind Wire Industries Ltd. (1995 (1) TMI 2 - SUPREME Court) has been considered in Commissioner of Income-Tax Vs Alagendran Finance Ltd. (2007 (7) TMI 304 - SUPREME Court ) and it has been said therein that there may not be any doubt or dispute that once an order of assessment is reopened, previous assessment would be held to be set aside and the whole proceedings would start afresh but the same would not mean that even when the subject matter of reassessment is distinct and different, the entire proceedings would deem to have been reopened. Learned counsel for Assessee also could not dispute that mistake regarding set off loss had occurred in the assessment order dated 31.03.2006 but on this aspect Assessee did not either carry dispute in appeal before CIT (A) or Tribunal or filed application for rectification within the period of limitation under Section 154 (7). Therefore, in the garb of remand order in relation to some other aspect, Assessee, could not have taken advantage of extension of limitation by seeking commencement thereof from the order passed by A.A. on the issue on which remand was made. - Decided against Assessee and in favour of Revenue - Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Tribunal was justified to hold that the limitation can only start from the original assessment order for rectification and not from the date of rectified order dated 25.1.2011. (vii) Whether the learned Tribunal was justified in holding that the order passed at the direction of the CIT (Appeals) and the Tribunal that the order dated 25.1.2011 passed by the assessing officer cannot be said to have been merged in the original order. (viii) Whether the learned Tribunal was justified in recording perverse findings of fact as well as the interpretation of Section 154 of the Income Tax Act without application of mind, which is against the legislative spirit of the Act. 3. We have excluded Question no. 5 since Tribunal has decided appeal on the ground of limitation and therefore, Question no. 5 does not arise from the judgment of Tribunal. 4. Before adjudicating upon aforesaid questions, a brief factual matrix would be necessary to understand real dispute. 5. Assessee, M/s Shree Nav Durga Bansal, Cold Storage Ice Factory (hereinafter referred to as Assessee ), for Assessment Year (hereinafter referred to as A.Y. ) 2003-04, filed Return under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to limit the same by 5 percent of expenses. Grounds no. 7 and 8 were found not liable for adjudication. Appeal was partly allowed vide order dated 13.06.2008. 8. With regard to long term capital gain on remand, assessment order was passed on 31.12.2009 computing long term capital gain as ₹ 33,40,926/- and total income at ₹ 34,35,920/-. This order of assessment was passed in absence of report of Valuation Officer since period to make assessment was going to expire on 31.12.2009. Report of Assistant Valuation Officer (hereinafter referred to as the A.V.O. ) dated 20.05.2010 thereafter was received in the office on 28.06.2010, determining fair market value as on 01.04.2002, at ₹ 64,98,300/-. In view thereof, computation of long term capital gain was modified suo-moto by A.A. in purported exercise of power under Sections 154, 254, 143 (3) of Act 1961 and it worked out long term capital gain chargeable to tax at ₹ 13,19,962/- and total income at ₹ 14,14,959/- vide order dated 25.01.2011. Assessee thereafter filed application dated 09.05.2011 under Section 154 of Act 1961 stating that capital loss (long term) of ₹ 12,49,310/- which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attained finality when assessment order dated 31.03.2006 was passed by A.A. since in appeal before CIT (A) and Tribunal, Assessee did not raise this plea at all. 11. The order of remand passed by Tribunal was only confined to determination of long term capital gain and not for any other purpose. It was limited, partial remand, confined to a particular purpose. Tribunal's order itself makes it clear as is evident from following:- We find that it shall be fair and reasonable if the A.O. asks for the valuation report from the valuation authorities to arrive at the fair and reasonable price of the land on the date of the transfer. Therefore, the issue is restored to the file of the A.O. for the limited purpose to arrive at the fair market value on the date of transfer by referring to the Valuation Authority. (emphasis added) 12. The above general concept of 'merger' in respect to judicial and quasi-judicial orders has been considered and recognised time and again. 13. In Chandi Prasad and Others Vs. Jagdish Prasad and Others [2004 (8) SCC 724], Court said : It is trite that when an Appellate Court passes a decree, the decree of the trial court merges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment (Explanation.- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed [on or before or after the 1st day of June, 1988] by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner [or Deputy Commissioner] or the Income-tax Officer on the basis of the4 directions issued by the [Joint] Commissioner under section 144A; (ii) an order made by the [Joint] Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorised by the Board in this behalf under section 120; (b) record [shall include and shall be deemed always to have included] all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had not been considered and decided in the appeal filed by the assessee. This is sufficient to answer the question which has been referred. (emphasis added) 18. Matter again came up in CIT Vs. Jai Kumar B. Patil [(1999) 236 ITR 469 (SC). The two questions up for consideration before Court were as under:- The Revenue sought the reference of the following two questions : (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law, in holding that the commissioner of Income-tax had no jurisdiction and powers to initiate proceedings under section 263 of the Income Tax Act, 1961, in respect of issues not touched by the Commissioner of Income-tax (Appeals) in his appellate order? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that not only the issues dealt with in the assessment order but also the other issues were merged in the Commissioner of Income-tax (Appeals)'s order ignoring the provisions contained in clause (c) of Explanation to sub-section (1) of section 263 of the Income-tax Act, 1961? 19. Relying on CIT Vs. Abuda Mills Ltd. (supra), the Court answ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find support from a decision in CIT Vs. Ratilal Bacharilal And Sons [(2006) 282 ITR 457 (Bom.)], wherein almost in similar circumstances, the Court said as under :- ........... At the instance of the assessee, the allowance on the sum of ₹ 5,63,350 could not have been the subject matter of appeal before the Commissioner of Income-tax (Appeals) as the assessee was never aggrieved with that part of the order. In other words, so far as weighted deduction under section 35B in the sum of ₹ 5,63,350 is concerned, the same was not a subject matter of the appeal before the Commissioner of Income-tax (Appeals). Factually, in this case, the doctrine of merger could not have been applied by the Tribunal to that part of the order ; which was not a subject matter of appeal as indicated, so as to exclude revisional jurisdiction of the Commissioner of Income-tax under section 263 of the Act. 23. We also find that judgment relied by learned counsel for Assessee in Hind Wire Industries Ltd. (supra) also supports the aforesaid view expressed by us. Therein an assessment order was passed on 21.09.1979. On a rectification petition filed under Section 154, assessment order was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to exist, the observations made in Delhi High Court judgment is more than what has been said. The judgment referred in Hind Wire Industries Ltd. (supra) related to the cases wherein Court found that effect of reopening and reassessment of assessment is to vacate the initial order of assessment and to substitute in its place the order made on reassessment. With this proposition there cannot be any quarrel and this aspect is already covered in Deputy CCT Vs Sri Ramulu (H.R.) (1977) 39 STC 177 (SC), V. Jaganmohan Rao and others Vs Commissioner of Income-Tax and Excess Profits Tax, Andhra Pradesh, (1970) 75 ITR 373 (SC) and CST Vs H.M. Esufali H.M. Abdulahi (1973) 90 ITR 271 (SC). 27. In Hind Wire Industries Ltd. (supra) Supreme Court has used word including in the amended or rectified order would mean that word order as the case may be can be either original order or amended order or rectified order depending upon the fact as to in which order Assessee is seeking rectification. To read it as if, once rectified order is passed, original order would disappear, would result in nullifying the effect of word including in the observations made by Supreme Court, while reading ..... X X X X Extracts X X X X X X X X Extracts X X X X
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