TMI Blog1975 (12) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of section 139(1) of the said Act. According to the petitioner interest was not charged because of the demise of the two senior partners of the petitioner-firm. According to the petitioner the representation of the petitioner was duly submitted before the assessing Income-tax Officer that the delay of four and a half months for filing the return was only because of the situation created by the death of its partners. The Income-tax Officer, according to the petitioner, was satisfied with the explanation and, therefore, waived the said interest. From the order passed by the Income-tax Officer it is not manifest whether he at all considered this aspect of the matter or whether there was conscious or deliberate waiver on the part of the Income-tax Officer of the liability of the petitioner to pay interest. The petitioner preferred an appeal before the Appellate Assistant Commissioner and the Appellate Assistant Commissioner passed an order on the 31st of January, 1973, confirming the assessment. On the 22nd of February, 1974, the impugned notice was issued by the Additional Commissioner of Income-tax, West Bengal-III. In the said notice the Additional Commissioner of Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sistant Commissioner, the order of the Income-tax Officer merged with the order of the Appellate Assistant Commissioner and such Commissioner had no power or jurisdiction to revise the order passed by the Appellate Assistant Commissioner, he was, therefore incompetent, in the facts and circumstances of the case, to interfere with the action of the Income-tax Officer in not charging any interest. It is not necessary to set out the provisions of section 263 of the Income-tax Act, 1961. It is indisputable that the Commissioner has no power to interfere or revise the order of the Appellate Assistant Commissioner. The only question is whether by the impugned notice the Commissioner was seeking to revise an order of the Income-tax Officer which had been merged in the order of the Appellate Assistant Commissioner. It is true that the assessment order was the subject-matter of appeal. But the appeal was from the assessment order. Under clause (c) of section 246 of the Income-tax Act, 1961, the assessee has a right of appeal if the assessee denies his liability to be assessed under the Act or against an order of assessment under sub-section (3) of section 143 or section 144 only where he--- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held that the Commissioner of Income-tax was not competent to pass any order under section 33B enhancing an assessment in a matter in which appeal was preferred against the order of the Income-tax Officer and the said order was confirmed by the Appellate Assistant Commissioner of Income-tax. The aforesaid observations still hold good, with respect, so far as these go. But the observations will have to be viewed in the light of the theory of merger now developed by the Supreme Court. In the case of Commissioner of Income-tax v. Amritlal Bhogilal Co. Ltd. [1958] 34 ITR 130 (SC), the Supreme Court had to consider whether an order granting registration to a firm under section 26A of the Indian Income-tax Act, 1922, merely affected or governed the procedure in collecting or recovering the tax found due from a firm and was separate from and independent of the order of assessment. There the Supreme Court observed that, however wide the power of the Appellate Assistant Commissioner might be in an appeal from an order of assessment, these could be exercised only in respect of matters which were specifically made appealable under section 31, and if any order had been deliberately le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court, depended on the nature of the appellate or revisional order in each case and the scope of the statutory provisions conferring the appellate or revisional jurisdiction. There, in the case before the Supreme Court, for the assessment year 1950-51 the dealer had submitted a return under the Madras General Sales Tax Act, 1939, showing its net turnover to the Deputy Commercial Tax Officer, who was the assessing authority. As he had determined the net turnover at a higher amount the dealer appealed to the Commercial Tax Officer who allowed the appeal with respect to one item. On the 28th of November, 1951, the assessing authority issued a revised assessment order as per the order of the Commercial Tax Officer. On the 27th of December, 1952, the dealer presented a revision petition before the Deputy Commissioner of Commercial Taxes raising the only objection as a new contention that it should not have been assessed to tax on amounts collected by it by way of tax. On the 21st of August, 1954, the Deputy Commissioner dismissed the petition on the ground that the dealer was not entitled to raise a new contention for the first time. On the 4th of August, 1958, the Board of Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion which was not the subject-matter of appeal before the Appellate Assistant Commissioner. Therefore, there cannot be any question of merger of the order of the Income-tax Officer on this aspect of the matter and on the theory of merger it cannot be said that the Commissioner lost his jurisdiction in this case after the order of the Appellate Assistant Commissioner. In the aforesaid view of the matter I am unable to accept the first contention urged in support of this application. The second contention urged in support of this application was that sub-section (8) of section 139 gave a discretion to the Income-tax Officer. The exercise of such discretion one way or the other could not be the subject-matter of interference by the revisional power of the Commissioner under section 263 of the Act. In aid of this submission reliance was placed on the observations of the Division Bench of the Allahabad High Court in the case of Lalloomal Dalal v. Income-tax Officer, District II(i), Kanpur [1959] 36 ITR 397 (All). There the Division Bench observed that it was a matter of discretion with the Income-tax Officer to reduce or waive the interest payable by the assessee, where the tax actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot could be gathered by all concerned. It is true that if the Income-tax Officer had exercised his discretion under sub-section (8) of section 139 of the Income-tax Act, 1961, then unless the Commissioner was of the view that such exercise of discretion was on improper or irrelevant materials or done mala fide, the Commissioner would not have jurisdiction to interfere with such exercise of the discretion. But in this case as apparent from the facts narrated it is not a question of the validity of the exercise of the discretion but it is a question of non-application of law to the facts of this case. If the interest that was liable to be charged under clause (iii) of the proviso to sub-section (1) of section 139 of the Act has not been charged then the order of the Income-tax Officer would be certainly prejudicial to the interest of the revenue and as such the Commissioner has jurisdiction. In aid of the aforesaid view reliance may be placed on the observations of the Kerala High Court in the case of Commissioner of Income-tax v. Cochin Malabar Estates Ltd. [1974] 97 ITR 466 (Ker). In the aforesaid view of the matter the second contention cannot be accepted. In the aforesaid view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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