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Issues involved:
The judgment addresses four questions referred by the Income-tax Appellate Tribunal under section 256(1) of the Income-tax Act, 1961. Question 1: The issue is whether the Commissioner can exercise revision powers under section 263 of the Income-tax Act, 1961, even for matters not covered by the appeal before the Commissioner of Income-tax (Appeals). The court held that the power of the Commissioner under section 263 is available even if an appeal is filed against only a portion of the assessment order. The doctrine of merger does not preclude the Commissioner from revising the remaining portion of the order not covered by the appeal. The court cited relevant legal principles and previous decisions to support this interpretation. Questions 2, 3, and 4: These questions were answered in the negative, in favor of the Revenue and against the assessee, based on a previous decision by the court. The court clarified that an order made by the Income-tax Officer following directions from the Inspecting Assistant Commissioner is still considered the Income-tax Officer's order and not that of the Inspecting Assistant Commissioner. Referred Case No. 177 of 1985: The question in this case was answered in the negative, in favor of the Revenue and against the assessee, following a previous decision cited by the court. No costs were awarded in either case. The judgment provides a detailed analysis of the legal provisions, the doctrine of merger in income-tax proceedings, and the legislative intent behind the relevant sections of the Income-tax Act. It emphasizes that the power of the Commissioner under section 263 extends to matters not considered and decided in an appeal, and that the legislative amendments further clarify this position. The court's decision aims to prevent abuse of the right of appeal to avoid revision proceedings under section 263.
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