Venkatachaliah & Rama Jois, JJ.
14th June 1982
Per Venkatachaliah, J.
This appeal involves a question of some importance which requires to be settled by pronouncement of a Full Bench. The Bench decision of this Court in ITRC 37 of 1973 on which the Revenue relies was, apparently, not cited before the Learned Single Judge. That decision might require reconsideration in the light of the pronouncements of the Supreme Court. Question of law referred for the opinion of the Full Bench :
Can the Commissioner of Income-Tax entertain 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-matters of the appellate and revisional proceedings are not the same but relate to distinct matters?
OPINION OF THE FULL BENCH
When an appellate authority has, in fact, dealt with an issue in its order, such matters are covered by the doctrine of merger. Similarly, if an appellate authority does not have the jurisdiction under the law to deal with an issue, the doctrine of merger does not operate in respect of that issue. These are now undisputed propositions. The controversy, however, is in relation to the application of the doctrine in each case depending upon the scope of the statutory provisions conferring the appellate or revisional jurisdiction. The controversy is in relation to such issues, which could have been dealt with by the appellate authority within its jurisdiction but in fact have not been dealt with by the said authority. It is also in relation to such issues which were in fact raised before the appellate or revisional authority but not dealt with by the said authority.
The AAC can look into and adjudicate upon findings recorded by the ITO not only against the assessee which may expressly be the subject matter of the appeal but also a matter which has been considered and determined by the ITO in the course of the assessment. In other words, the entire subject matter of the assessment would be within the jurisdiction of the AAC.
The view of the High Court in the decision in Vijayalakshmi Lorry Service Case, that the entire order merges when the order was taken in appeal and was, modified by AAC and that 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, is neither unreasonable nor erroneous. There is, therefore, no compelling reason to review that decision.
Clause (c) of Section 264(4) provides that the Commissioner shall not revise any order which has been made the subject of an appeal to the Tribunal. It is in the nature of an injunction against the Commissioner. The bar imposed by this provision is express and absolute irrespective of the relief claimed in such an appeal or irrespective of the party who has preferred the appeal before the Tribunal........The Commissioner's jurisdiction to revise an order is burred if that order has been appealed to the Tribunal.
In the circumstances of the case since the Revenue has taken the order of the AAC in appeal before the Tribunal, the question referred must be answered in the negative. The Commissioner has no jurisdiction to entertain the Revision Petition of the assessee under Section 264 of the Act since that order sought to be revised was already the subject matter of an appeal to the Tribunal.