M. Katju, J. - (1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961, by which the following question has been referred to us for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the order of the Commissioner of Income-tax dated February 4, 1975, was void ab initio and that the Appellate Assistant Commissioner did not derive legal authority from it to redetermine the appeal against the order of the Income-tax Officer under Section 26A dated November 8, 1965, in view of the fact that the earlier order of the Appellate Assistant Commissioner rejecting the assessee's appeal dated January 25, 1968, had merged in the order of the Tribunal in I. T. A. No. 1528/(Alld) of 1971-72 dated November 16, 1972, and that such order could not be interfered with by the Commissioner of Income-tax under Section 264 ?"
(2.) WE have heard Shri Saran Behari Lal Srivastava, learned counsel for the assessee and learned standing counsel for the Department. The facts of the case are that the assessee is a firm and its application for registration for the assessment year 1961-62 was rejected by the Income-tax Officer by order dated November 8, 1965, and the assessment was made under Section 23(4) of the Indian Income-tax Act, 1922. The assessee appealed against both the order under Section 23(4) and the order under Section 26A refusing renewal of registration. The order under Section 23(4) was cancelled by the Appellate Assistant Commissioner by his order dated January 5, 1968. The appeal filed against the order under Section 26A, however, was rejected by the Appellate Assistant Commissioner by his order dated January 25, 1968, on the ground of limitation. Against this order of the Appellate Assistant Commissioner, the assessee preferred an appeal before the Appellate Tribunal. This appeal was also dismissed by the Tribunal on the ground of limitation as being time-barred. It appears that the assessee had applied to the Commissioner of Income-tax on November 7, 1972, under Section 264 against the order dated January 25, 1968, of the Appellate Assistant Commissioner rejecting the appeal in respect of registration for the assessment year 1961-62. The Commissioner of Income-tax passed an order under Section 264 on February 4, 1975, setting aside the order of the Appellate Assistant Commissioner dated January 25, 1968, with the direction that he should condone the delay and consider the appeal regarding registration on the merits. It appears that the Commissioner of Income-tax attention was not drawn to the order of the Tribunal by which the appeal had been dismissed on the ground of limitation. The Appellate Assistant Commissioner in compliance with the aforesaid order of the Commissioner reheard the appeal on the merits and directed that registration be allowed to the assessee. A copy of the order of the Appellate Assistant Commissioner is dated April 14, 1976. Against this order of the Appellate Assistant Commissioner, the Department went up in appeal and the Tribunal held that the order of the Commissioner of Income-tax dated February 4, 1975, was void ab initio. On the application of the assessee, this reference has come up to this court.
(3.) AFTER having heard learned counsel for the parties and having gone through the matter, we are in agreement with the opinion expressed by the Tribunal. Since the matter had been dismissed by the Tribunal on the ground of limitation in our opinion, the order of the Appellate Assistant Commissioner merged in the order of the Tribunal. Hence, in view of the bar under Section 264(4), the order of the Commissioner of Income-tax under Section 264 is null and void. In view of the above, we answer the question referred to us in the affirmative, i.e., in favour of the Department and against the assessee.;