TMI Blog1978 (2) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... 22, 1971. The immovable property was ascertained at Rs. 13,01,600 and the net wealth was ascertained at Rs. 8,21,574. For the assessment year 1967-68, the assessment order was passed on February 22, 1971. The immovable property was taken to be Rs. 13,01,600 and the net wealth was ascertained at Rs. 8,28,474. Notices of demand were issued under section 30 of the Act for assessment years 1965-66 to 1967-68 and necessary refund orders were issued and adjusted and ultimately the requisite amounts were paid by the petitioner. After adjustment of the refunds of some amounts notices of demand for the balance sum of Rs. 754 for the assessment year 1965-66 was issued and that amount was also paid by the petitioner. Against the assessment orders for these three years 1965-66 to 1967-68, the assessee went in appeal before the Appellate Assistant Commissioner who by his order dated June 23, 1971, reduced the net wealth of the petitioner by Rs. 15,000 in each of the three assessment years under appeal before him. By virtue of the appellate orders passed by the Appellate Assistant Commissioner, the petitioner became entitled to refund of Rs. 150 in each of the three assessment years and the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the slab in which the net wealth as ascertained in assessment proceedings falls. Clause (c) is material because under that clause, in addition to the flat rate of tax mentioned in the case of every individual and Hindu undivided family, where the net wealth of the individual or Hindu undivided family includes the value of any asset, being building or land (other than business premises), or any right in such building or land, situated in any area falling in category A or category B or category C or category D specified in rule 2 of Paragraph B, tax at the specified rate or rates computed with reference to the value of such assets determined in accordance with rule 1 of the said Paragraph B and the various rates depend upon the category and the valuation has to be added to the wealth-tax determined in accordance with clause (b) of Paragraph A. The department apparently had not added this additional amount of wealth-tax in computing the wealth-tax when the assessment orders of February 22, 1971, were passed and the question is, whether the order which is sought to be rectified is the order of the Wealth-tax Officer passed on February 22, 1971, or the order which is sought to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to section 251 of the Income-tax Act, 1961, is on the same lines as sub-section (5A) of section 23 of the Wealth-tax Act. The Explanation to section 251 mentions : " In disposing of an appeal, the Appellate Assistant Commissioner 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 by the appellant. " Under sub-section (1) of section 251 of the Income-tax Act, in disposing of an appeal, the Appellate Assistant Commissioner would have the following powers : in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment ; or he may set aside the assessment and refer the case back to the Income-tax Officer for making a fresh assessment in accordance with the directions given by the Appellate Assistant Commissioner and after making such further enquiry as may be necessary, and the Income-tax Officer shall thereupon proceed to make such fresh assessment and determine, where necessary, the amount of tax payable on the basis of such fresh assessment ; in an appeal against an order imposing a pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctify it. The question is whether this hypothesis is correct. Does the doctrine of merger apply in all its fulness so that an order of assessment made by the Income-tax Officer could be said to merge in the order of the Appellate Assistant Commissioner wholly, not only in respect of items considered and decided by the Appellate Assistant Commissioner but also in respect of items not considered and decided by him ? " The Division Bench in Karsandas Bhagwandas Patel's case [1975] 98 ITR 255 (Guj) held that, having regard to principles as well as authority, it was not possible to say that the doctrine of merger does not apply at all to income-tax proceedings. At page 261 it was pointed out : " So also where an appeal is preferred by an assessee against an order of assessment in respect of all the items considered and decided by the Income-tax Officer so that the whole of the order of assessment made by the Income-tax Officer is for consideration by the Appellate Assistant Commissioner, the effect of the decision of the Appellate Assistant Commissioner would be to substitute his determination for that of the Income-tax Officer in respect of all items considered and decided by the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Commissioner anti partly of decisions of the Income- tax Officer. The collective effect of these decisions results in the computation of total income and determination of tax. The order of assessment made by the Income-tax Officer thus does not merge wholly in the order made by the Appellate Assistant Commissioner. It is only that part of the order of assessment which consists of decisions reviewed by the Appellate Assistant Commissioner-- and when we use the word ' reviewed ', we mean, considered and examined irrespective of whether ultimately affirmed, modified or reversed--that is superseded by the order of the Appellate Assistant Commissioner. " The legal position was thus summarized by the Division Bench at page 265 : " The legal position may, therefore, be summarized by stating that even after an appeal from an order of assessment is decided by the Appellate Assistant Commissioner, a mistake in that part of the order of assessment which was not the subject-matter of review by the Appellate Assistant Commissioner and was left untouched by him can be rectified by the Income-tax Officer. " In the light of these principles with which we are in entire agreement, we have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with nor touched upon by the Appellate Assistant Commissioner. It is, therefore, clear that the omission in the original order passed on February 22, 1971, was sought to be rectified by the Wealth-tax Officer when he initiated proceedings under section 35(1) of the Act and he wanted to rectify it by removing that error from the order of assessment for each of the three years under consideration. It is obvious that what he was seeking to do was not in consequence of the order passed by the Appellate Assistant Commissioner nor was it in consequence of what the Appellate Assistant Commissioner had done in respect of each of the three years under consideration but was a matter which should have been dealt with initially by the Wealth-tax Officer himself and was not dealt with by him at that stage when he passed the orders on February 22, 1971. Therefore, for the purpose of limitation under section 35, sub-section (7)(b), of the Wealth-tax Act, the period of four years has to be calculated from the date of the orders passed by the Wealth-tax Officer himself, namely, February 22, 1971 ; this point was not dealt with by the Appellate Assistant Commissioner and, therefore, it could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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