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Issues involved: The quashing of the order of assessment made against the petitioner by the Income-tax Officer for the assessment year 1983-84, exercise of power u/s 263 of the Income-tax Act by the respondent to revise the order of assessment, applicability of the doctrine of merger.
Summary: The petitioner, engaged in the export of coffee and deriving interest on deposits and dividend incomes, had certain expenses disallowed by the Inspecting Assistant Commissioner in the assessment. The Commissioner of Income-tax (Appeals) partially allowed the petitioner's appeal. Subsequently, the respondent issued a notice u/s 263 proposing to revise the assessment due to the omission of a sales tax refund amount from taxation. The main issue was whether the order of assessment by the Inspecting Assistant Commissioner merged with the Commissioner of Income-tax (Appeals) order, and if the respondent could revise the former's order u/s 263. The court considered the doctrine of merger and relevant case laws cited by both parties. The court noted that the appellate authority could have addressed the taxability of the sales tax refund amount, making it part of the assessment subject-matter. Referring to a Full Bench decision, the court emphasized that the entire assessment order merges with the appellate order, preventing the respondent from revising it u/s 263 on another ground. In light of the legal precedent and the doctrine of merger extending to all issues arising in an assessment proceeding, the court ruled in favor of the petitioner, setting aside the respondent's order as lacking jurisdiction. The writ petition was allowed, and no costs were awarded.
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