1988 (8) TMI 142 - AT - Income Tax

Summary

Issues:
1. Whether the order of the Assessing Officer had merged with the order of the CIT(A) under section 263.
2. Whether the order of assessment was erroneous and prejudicial to the interest of Revenue.
3. Whether the CIT exceeded jurisdiction in passing the order under section 263.

Detailed Analysis:
1. The appeal raised the issue of merger of orders between the Assessing Officer and the CIT(A) under section 263. The CIT observed that the issue raised by the CIT for revision was different from what was before the CIT(A). The Special Bench decision highlighted the concept of total merger of assessment orders with the appellate authority's order. However, subsequent decisions by different High Courts indicated that issues not raised or decided by the appellate authority do not merge. The Gauhati High Court emphasized that there cannot be more than one operative order governing a matter simultaneously. Ultimately, the Tribunal concluded that the point regarding warehousing maintenance was not before the CIT(A) and, therefore, the Assessing Officer's order did not merge with the CIT(A) order.

2. The contention was whether the order of assessment was erroneous and prejudicial to the interest of Revenue. The CIT found the assessment order lacking proper enquiries, particularly regarding warehousing maintenance expenses. The Tribunal noted that the Assessing Officer did not discuss certain expenses, leading to the conclusion that the order was indeed erroneous and prejudicial to Revenue. The CIT's decision to set aside the assessment for proper enquiries was upheld by the Tribunal, considering the lack of discussion on crucial points in the assessment order.

3. The issue of jurisdiction arose concerning the CIT's order under section 263. The assessee argued that there was no error in the assessment order to warrant the CIT's intervention. The Tribunal reviewed the facts and submissions from both sides. It was noted that the Assessing Officer did not adequately inquire into certain expenses, leading to the order being deemed erroneous and prejudicial to Revenue. The Tribunal upheld the CIT's decision to set aside the assessment for proper examination, indicating that the CIT did not exceed jurisdiction in this regard.

In conclusion, the Tribunal rejected the appeal by the assessee, upholding the CIT's decision under section 263 due to errors in the assessment order and the lack of proper enquiries by the Assessing Officer.