1989 (7) TMI 73 - HC - Income Tax

Summary

Issues:
1. Jurisdiction of the Commissioner of Income-tax to issue notice under section 16 of the Companies (Profits) Surtax Act, 1964.
2. Doctrine of merger of orders in the context of revision of assessment orders.
3. Applicability of decisions in General Beopar Co. (Pvt.) Ltd. v. CIT [1987] 167 ITR 86 and Amritlal Bhogilal and Co. Ltd. [1958] 34 ITR 130.

Detailed Analysis:

Issue 1: The primary issue in this case was the jurisdiction of the Commissioner of Income-tax to issue a notice under section 16 of the Surtax Act. The petitioner challenged the notice on the grounds that there was no material or circumstance to deem the assessment erroneous. It was argued that the Commissioner acted mechanically without proper consideration. The petitioner contended that the notice was issued without jurisdiction as the original order had merged with the order of the Appellate Assistant Commissioner, making it impermissible for the Commissioner to revise the order.

Issue 2: The doctrine of merger of orders was crucial in determining the validity of the notice. The petitioner relied on the decision in General Beopar Co. (Pvt.) Ltd. v. CIT, emphasizing that once an order of assessment is appealed against and an order is passed by the appellate authority, there is a merger of the assessment order with the appellate order. The Division Bench held that once proceedings for reassessment are initiated, the original order loses its finality, and the Commissioner cannot revise it.

Issue 3: The applicability of legal precedents, particularly the decision in General Beopar Co. (Pvt.) Ltd. v. CIT and Amritlal Bhogilal and Co. Ltd., was pivotal in the judgment. The court extensively discussed the observations of the Division Bench and the Supreme Court regarding the doctrine of merger. It was emphasized that once an appeal is preferred and an appellate order is passed, there is no authority left to revisit the initial order. The court concluded that there was no impediment to granting the reliefs sought by the petitioner based on the principles established in the cited cases.

In conclusion, the High Court of Calcutta allowed the writ petitions, making the rules absolute and quashing the impugned notice(s) and proceedings. The court's decision was based on the lack of jurisdiction of the Commissioner of Income-tax to issue the notice under section 16, considering the doctrine of merger of orders and the legal precedents cited during the proceedings.