K.S. Puttaswamy, J.
1. This appeal is by the appellant who was the respondent and is directed against the order dated March 6, 1981, of Chandrakantaraj Urs J. allowing W.P. No. 4803 of 1979 (Hindustan Aeronautics Ltd, v. CIT] filed by the respondent/petitioner since reported in : 132ITR461(KAR) .
2. M/s. Hindustan Aeronautics Ltd., Bangalore, a wholly owned Central Government company, engaged in the manufacture of aeroplanes and its parts, who is the respondent before us and was the petitioner before the learned judge, is an assessee on the file of the Income-tax Officer, Company Circle, Bangalore. For the assessment year 1970-71, relevant to the accounting year ending March 31, 1970, the assessee filed its return before the Income-tax Officer who on March 15, 1973, completed the assessment disallowing certain allowances claimed by it on certain grounds that, are not necessary to notice. Against the assessment order of the Income-tax Officer, the assessee filed an appeal before the Appellate Assistant Commissioner who by his order dated October 27, 1976, partly allowed the same.
3. Aggrieved by the said orders of the Appellate Assistant Commissioner and the Income-tax Officer, the assessee and the Revenue filed second appeals before the Income-tax Appellate Tribunal, Bangalore, to the extent they were aggrieved by them. On May 9, 1977, the assessee withdrew its appeal before the Tribunal with liberty reserved to approach the Commissioner of Income-tax in a revision under Section 264 of theIncome-tax Act, 1961 (the Act). On May 28, 1978, the Tribunal, however, dismissed the appeal filed by the Revenue on merits.
4. On May 19, 1977, the assessee filed a revision under Section 264 of the Act before the Commissioner to the extent it was aggrieved by the order of the Appellate Assistant Commissioner and the Income-tax Officer for the aforesaid assessment year. On December 22, 1978, the Commissioner dismissed the said revision petition filed by the assessee in limine as not maintainable in the view that the orders of the Appellate Assistant Commissioner and the Income-tax Officer had merged in the order of the Tribunal and that it was not open to him to interfere with the same under Section 264 of the Act.
5. In W.P. No. 4803 of 1979, the assessee challenged the said order of the Commissioner before this court. On March 6, 1981, Chandrakantaraj Urs J. allowed the said writ petition and directed the Commissioner to entertain the revision petition filed by the assessee in terms of Circular No. XVI/11/69 issued by the Central Board of Direct Taxes and examine the case on merits. Aggrieved by this order of Chandrakantaraj Urs J., the Commissioner has filed this appeal before us.
6. On an earlier occasion, this appeal was heard by a Division Bench consisting of Venkatachalaiah and Rama Jois, JJ. who by their order made on June 14, 1982, doubting the correctness of a Division Bench ruling of this court in I.T.R.C. No. 37 of 1973 decided on September 17, 1975 (Vijayalakshmi Lorry Service's case : 157ITR327(KAR) , relied on by the appellant, referred the following question of law as arising in the appeal for the opinion of a Full Bench of this court (CIT v. Hindustan Aeronautics Ltd. : 157ITR315(KAR) ;
' Can the Commissioner of Income-tax entertain the assessee's revision petition under Section 264 of the Income-tax Act, 1961, preferred from a part of the appellate order of the Appellate Assistant Commissioner against which the assessee is aggrieved during the pendency or after the disposal, as the case may be, of the Department's second appeal before the Income-tax Appellate Tribunal preferred against another part of the same order where the subject-matter of the appellate and revisional proceedings is not the same but relates to distinct matters.'
7. On October 26, 1984, a Full Bench of this court has furnished its opinion on the said question in the negative and in favour of the appellant.
8. Sri K. Srinivasan, learned senior standing counsel for the Income-tax Department, appearing for the appellant contends that in view of the opinion furnished by the Full Bench, the order made by the learned judge cannot be allowed to stand and the writ petition filed by the respondent requires to be dismissed.
9. Sri G. Sarangan, learned counsel appearing for the respondent, refuting the contention of Sri Srinivasan, sought to sustain the order of the learned judge in terms of the observations made by the Full Bench at para 18 of its order. Sri Sarangan contends that notwithstanding the opinion of the Full Bench in the case, the Circular issued by the Board under Section 119 of the Act was binding on the Commissioner in terms of which he was bound to examine the revision petition of the respondent on merits and the order of the learned judge had done no more than that. In support of his contention, Sri Sarangan strongly relies on the rulings of the Supreme Court in Navnitlal C.Javeri v. K.K. Sen, AAC : 56ITR198(SC) , Ellerman Lines Ltd. v. CIT : 82ITR913(SC) and K.P. Varghese v. ITO : 131ITR597(SC) .
10. Earlier, we have noticed that the orders made by the Appellate Assistant Commissioner and the Income-tax Officer had been subjected to an appeal before the Tribunal by the Revenue which had decided the same in a particular manner. In Addl, CIT v. Vijayalakshmi Lorry Service's case (I.T.R.C. No. 37 of 1973 : 157ITR327(KAR) , a Division Bench of this court had expressed that when an order had been subjected to an appeal, that order in its entirety merges in the order of that appellate authority. In the reference made, the Division Bench expressed its doubt on that enunciation and, therefore, formulated the question of law noticed earlier and referred the same for the opinion of a Full Bench which has expressed that the same did not call for reconsideration and had even expressed its concurrence with the same, speaking through one of us (Hakeem J.) in these words (pp. 324, 325 of 157 ITR):
' Amid this diversity of opinions, this High Court in Vijayalakshmi Lorry Service's case : 157ITR327(KAR) without much fuss over the matter has held that the entire order merges when the order was taken in appeal and was modified by the Appellate Assistant Commissioner. Such an order becomes final and the Commissioner was precluded from taking proceedings under Section 263 of the Act to revise the order of the Income-tax Officer on another ground. That decision was rendered on September 17, 1975, and is being followed by the authorities in this State. The view taken in that decision is neither unreasonable nor erroneous. Similar view has been taken, as earlier noticed, by the High Courts of Allahabad, Calcutta, Madhya Pradesh, etc. There is, therefore, no compelling reason to review that decision. It is not proper for us to reverse that decision, merely because another view is also possible. Consistency in law should be the hallmark in the administration of justice.
In the view that we have taken, the question referred to the Full Bench must be answered In the negative.'
11. What emerges from this is that the order of the Appellate Assistant Commissioner in its entirety had merged in the order of the Tribunal and, therefore, it was not open to the Commissioner to revise the same. In other words, what the Commissioner had really done was to follow the enunciation made by a Division Bench of this court in Vijayalakshmi Lorry Service's case : 157ITR327(KAR) , without, however, noticing the same which is now reiterated by a Full Bench of this court in the case. Unfortunately, the attention of the learned judge was not drawn to Vijayalakshmi Lorry Service's case : 157ITR327(KAR) , which was binding on him and if it had been so done, we have no doubt that the learned judge would not have interfered with the order of the Commissioner notwithstanding a contrary circular of the Board in that behalf. After all, a court cannot compel an authority to act in defiance of law declared by the Supreme Court or this court. Any such attempt is plainly opposed to the rule of law enshrined in our Constitution.
12. In the rulings relied on by Sri Sarangan, the Supreme Court was not dealing with the enforcement of a circular issued by the Board contrary to its own declaration of law or by a High Court in the country. We are of the view that the ratio in those cases does not bear on the point.
13. On the above discussion, we hold that the order of the learned judge that is opposed to the enunciation made in Vijayalakshmi Lorry Service's case : 157ITR327(KAR) and reiterated in the case by the Full Bench, cannot be upheld by us.
14. In its opinion, the Full Bench at paras 16 and 17 (pp. 326, 327 of 157 ITR) had expressed that the revision filed by the assessee was not maintainable. On this enunciation also, which is binding on us, we cannot uphold the order of our learned brother.
15. In para 18, the Full Bench [CIT v. Hindustan Aeronautics Ltd. : 157ITR315(KAR) has observed thus:
' We, however, express no opinion on the Commissioner's power to entertain the revision petition under the circular issued by the Central Board of Direct Taxes under Section 119 of the Act.'
16. But this observation cannot be construed by us that we can sustain the order of the learned judge contrary to its own opinion. We see no merit in this contention of Sri Sarangan.
17. In the result, we allow this appeal, set aside the order dated March 6, 1981 of Chandrakantaraj Urs J. and dismiss W.P. No. 4803 of 1979[Hindustan Aeronautics Ltd. v. CIT : 132ITR461(KAR) filed by the respondent with no order as to costs both here and also before the learned judge.
Orders on the oral application made by the respondent for a certificate of fitness to appeal to the Supreme Court under Articles 133 and 134A of the Constitution.
18. Immediately after we completed our dictation allowing the appeal filed before us, Sri G. Sarangan, learned counsel appearing for the respondent, makes an oral application for a certificate of fitness to appeal to the Supreme Court of India against our said decision under Articles 133 and 134A of the Constitution on the ground that the questions decided by us raise substantial questions of law of general importance which need to be decided by the Supreme Court.
19. On the theory of merger, extent of merger, the true scope and ambit of Section 264 of the Income-tax Act, 1961, that are involved in this case, there is diversity of opinion among the various High Courts in the country which frequently arose and they have not so far been set at rest by the Supreme Court of India. We are, therefore, of the opinion that the questions raised in this case are substantial questions of law of general importance and the same needs to be decided by the Supreme Court of India.
20. In the result, we allow the application made by the respondent and grant a certificate of fitness to appeal to the Supreme Court under Articles 133(1) and 134A of the Constitution and direct the Registrar to issue the necessary certificate in that behalf to the respondent.