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TMI Blog2019 (4) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... at such order could have been sustained not on the ground on which the Assessing Officer had rejected it, but on some other legal ground, it was open for the Revenue to argue the same before the Appellate Commissioner. Nothing prevented the Revenue from persuading the Appellate Commissioner to reject the claim of the assessee on such legal ground. At any rate, the Commissioner in exercise of the revisional powers cannot initiate fresh inquiry about the same claim on the ground that one of the aspects of such a claim was not considered by the Assessing Officer. Clause (c) of Explanation 1 may be worded in a manner as suggesting the extent of the powers of the Commissioner for taking an order in revision, its effect is of circumscribing such powers in cases where the order passed by the Assessing Officer has been subject matter of any appeal and such subject matter has been considered and decided in such appeal. This provisions thus statutorily recognizes the principle of merger and avoids any conflict of opinion between two quasi judicial authorities of the same rank. - INCOME TAX APPEAL NO. 1359 OF 2016 - - - Dated:- 26-3-2019 - AKIL KURESHI SARANG V. KOTWAL, JJ. Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of assessment passed by the Assessing Officer was erroneous and prejudicial to the interest of the Revenue. He set aside the order and directed the assessment to be made afresh after considering the proviso to Section 2(15) of the Act. 4. The assessee challenged this revisional order of the Commissioner before the Tribunal. The Tribunal by the impugned order, allowed such appeal on the ground of merger as well as on the ground that the order of assessment cannot be stated to be prejudicial to the interest of the Revenue since in any case, the Assessing Officer had rejected the assessee s claim of exemption under Section 11 of the Act, may not be with reference to Section 2(15) of the Act. This order, the Revenue has challenged in the present appeal. 5. Appearing for the Revenue, learned counsel Mr. Suresh Kumar contended that the assessee was hit by the proviso to Section 2(15) of the Act and therefore, its activities were not charitable in nature. Automatically, therefore, the assessee s claim for exemption under Section 11 of the Act would not survive. The Assessing Officer had not examined this important aspect and passed the order of assessment which was thus, err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. The assessee had replied to such queries upon which the Assessing Officer did not invoke the said provision. Learned counsel contended that merely because in the order of assessment, the Assessing Officer did not give reasons for accepting the assessee s explanation, would not imply that no inquiry was carried out. The Commissioner, thus proceeded entirely on erroneous footing that the Assessing Officer had not examined the applicability of the proviso to Section 2(15) of the Act. 7. Section 2(15) of the Act as is well known defines the term charitable purpose . This includes range of activities such as relief for poor, education, medical relief etc and the advancement of any other object of general public utility . The proviso to Section 2(15) of the Act as it stood at the relevant time reads as under:- Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellate Commissioner to reject the claim of the assessee on such legal ground. At any rate, the Commissioner in exercise of the revisional powers cannot initiate fresh inquiry about the same claim on the ground that one of the aspects of such a claim was not considered by the Assessing Officer. 9. This Court in case of Narendrakumari (supra) considered the principle of merger of the order of assessment into that of the order of the Appellate Commissioner. It was held that when the order of assessment merges with the order of the Appellate Commissioner in its entirety, the Commissioner would have no jurisdiction to revise such order of assessment. It was held that the order of Assessing Officer was no longer revisable. 10. In case of Nirma Chemicals Works P Ltd (supra), the Division Bench of Gujarat High Court dealt at some length on the principle of merger. It was a case in which the assessee had claimed deduction under Section 80I of the Act which the Assessing Officer allowed partially. The assessee filed an appeal against the disallowance. The Commissioner (Appeals) allowed the appeal. Subsequently, the Commissioner in exercise of powers under Section 263 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's request for making no additions, the assessee carried the matter in appeal. Appellate Commissioner deleted even the limited additions made by the Assessing Officer. The limited additions made by the Assessing Officer and the larger additions proposed by the Commissioner in the impugned notice are inextricably inter linked. The Commissioner argues that the entire purchases were bogus. The Assessing Officer accepted the purchases as genuine but added certain amount on the premise that the assesse's profit from such dealings would have been higher than disclosed. The entire issue was at large before the Appellate Commissioner. It is well known that the Commissioner (Appeals) while hearing the assessee's appeal has powers to even enhance the assessment. If he was of the opinion that not only limited additions made by the Assessing Officer but much larger additions were justified, he could have certainly exercised such powers, of course after putting the assessee to notice. In this context, we may refer to clause (c) of Explanation 1 to sub-section (1) of section 263 of the Act. As is well known sub-section (1) of section 263 of the Act empowers the Principal Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X
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