TMI Blog1987 (4) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... three years were completed on September 30, 1968. But the Income-tax Officer did not charge interest under section 139(8) of the Act for delay in the submission of the returns and interest under section 217 of the Act for failure to file the estimate of advance tax. The assessee filed appeals against all the three assessment orders which were disposed of by the Appellate Assistant Commissioner on May 14, 1969. On September 19, 1970, the Additional Commissioner of Income-tax served the assessee with a combined notice for all the three years under section 263 of the Income-tax Act, 1961, requiring the assessee to show cause why the orders passed by the Income-tax Officer without levying interest under section 139 and under section 217 of the Act be treated as erroneous and prejudicial to the interests of the Revenue and the interest under those sections be charged. The assessee raised several objections which were rejected. The Additional Commissioner held that since the Income-tax Officer did not call upon the assessee to pay interest under section 139 and under section 217 of the Income-tax Act, 1961, he must be deemed to have waived interest under those sections. He next held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of waiver of interest afresh indicated that he was not himself convinced that the orders of waiver were erroneous or prejudicial to the interests of the Revenue. The assessee's submission that the interest was chargeable under section 217 at the uniform rate of 6% was also accepted by the Tribunal. The Tribunal has referred to this court the following five questions of law arising out of its impugned order : " (1) Whether the Income-tax Officer constructively waived, interest under section 139 and section 217 of the Income-tax Act, 1961, by an order in writing? (2) Whether the orders of the Income-tax Officer merge with the order of the Appellate Assistant Commissioner on all points in respect of which an appeal could have been filed before him or in respect of which the Appellate Assistant Commissioner could have modified the order ? (3) Whether an order charging interest under section 139 and an order charging interest under section 217 of the Income-tax Act, 1961, are appealable orders ? (4) Whether, on the facts and in the circumstances of the case, the order of the Additional Commissioner of Income-tax relating to the waiver of interest under section 139 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perior tribunal is what is actually considered by the superior tribunal. Shri Toprani, learned counsel for the assessee, on the other hand, stated that the issue was squarely covered by this court's decision in CIT v. Tejaji Farasram Kharawala [1953] 23 ITR 412, and that the said decision, having not been overruled by the Full Bench of this court or the Supreme Court or even adversely commented upon, was binding on this Bench. We have considered the rival contentions carefully. In our opinion, this court's decision in CIT v. Tejaji Farasram Kharawala [1953] 23 ITR 412, still holds the field and is binding on us. Chief justice Chagla in that case has categorically held that the principle underlying section 33B of the 1922 Act, corresponding to section 263 of 1961 Act, is that it is only the order of the Income-tax Officer which can be revised by the Commissioner. Once the order of assessment is confirmed by the Appellate Assistant Commissioner or any order with regard to the assessment has been made by him, that becomes a final order of assessment and the only right the Department has is the right of appeal to the Appellate Tribunal. The right of the Commissioner continues so long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1953] 23 ITR 412 at page 134 of its judgment without adversely commenting upon it. On the contrary, from the statement of law at page 136 reading as: " There can be no doubt that, if an appeal is provided against an order passed by a tribunal, the decision of the appellate authority is the operative decision in law. If the appellate authority modifies or reverses the decision of the tribunal, it is obvious that it is the appellate decision that is effective and can be enforced. In law, the position would be just the same even if the appellate decision merely confirms the decision of the tribunal. As a result of the confirmation or affirmance of the decision of the tribunal by the appellate authority, the original decision merges in the appellate decision and it is the appellate decision alone which subsists and is operative and capable of enforcement; but the question is whether this principle can apply to the Income-tax Officer's order granting registration to the respondent. " It appears clear that this court's decision in CIT v. Tejaji Farasram Kharawala [1953] 23 ITR 412 has been approved. It was only because the order granting registration was, according to the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing what is the subject matter of the appeal, not in the sense of revising those matters about which the assessee makes a grievance, but a revising authority in the sense that once the appeal is before him he can revise not only the ultimate computation arrived at by the income-tax Officer but he can revise every process which led to the ultimate computation or assessment. In other words, what he can revise is not merely the ultimate amount which is liable to tax, but he is entitled to revise the various decisions given by the Income-tax Officer in the course of the assessment and also the various incomes or deductions which came in for consideration of the Income-tax Officer. " It thus appears clear to us that the order of the Income-tax Officer under appeal merges completely in the order of the Appellate Assistant Commissioner. As stated earlier, Shri Jetly has strongly relied on the decision of the Supreme Court in State of Madras v. Madurai Mills Co. Ltd. [1967] 19 STC 144 and this court's decision in CIT v. Sakseria Cotton Mills Ltd. [1980] 124 ITR 570. In particular, our attention was invited to the following observations of their Lordships in the Supreme Court case [196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be that only that part of the order of the .ITO merges or stands superseded by the order of the AAC in respect of which the AAC has exercised his appellate jurisdiction. So far as the remaining part of the order of assessment is concerned, that continues to be unaffected by the decision of the AAC and it continues to have its independent existence unaffected by any decision of the AAC. The doctrine of merger, therefore, is not wholly applicable in the case of such orders made under the I.T. Act." It was stated on behalf of the Department that there is a conflict of view amongst the High Courts on the issue. The above decision was rendered in the context of section 35 of the 1922 Act. The earlier decision of this court in CIT v. Tejaji Farasram Kharawala [1953] 23 ITR 412 was, it appears, not brought to the notice of the court. The earlier decision holds good so far as the question of the Commissioner's powers under section 263 is concerned. We are inclined to take this view particularly because the Supreme Court has in CIT v. Amritlal Bhogilal Co. [1958] 34 ITR 130, as pointed out by us in an earlier paragraph, affirmed this court's decision. This decision is on all fours and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him." This being so, it has to be held that the deemed order of waiver of interest under section 139 and section 217 was part and parcel of the process of assessment and, therefore, merged with the order of the Appellate Assistant Commissioner on the same logic. Moreover, the Explanation to section 251 of the Act makes the position quite clear. The Explanation reads as under : " Section 251. Explanation.-In disposing of an appeal, the Appellate Assistant Commissioner (or, as the case may be, the Commissioner (Appeals)) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Appellate Assistant Commissioner or, as the case may be, the Commissioner (Appeals) by the appellant. " It cannot, therefore, be accepted that the Appellate Assistant Commissioner could not have interfered with this part of the order, having regard to his powers under section 25 l(1) read with the Explanation thereto, which have been held to be plenary and conterminous with those of the Income-tax Officer by the Supreme Court in CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225, and by this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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