SENGUPTA, J. - (1.) IN this reference under S. 256(2) of the IT Act, 1961 (the Act') for the asst. yr. 1981-82, the following question has been referred to this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the CIT cannot revise the order of assessment dt. 8th April, 1984 since it got merged in the order of the CIT (A) dt. 21st March, 1985 when the payment of bonus which was the subject-matter of the CIT's order under S. 263 of the IT Act, was not before the CIT (A)?
(2.) SHORTLY stated, the facts are that the ITO in his order of assessment dt. 8th Aug., 1981 allowed deduction of Rs. 22,20,834 being ad hoc payment made to the workers over and above the minimum bonus payable under the payment of Bonus Act, 1965. The CIT found that the ITO allowed the said deduction without application of mind. He initiated proceedings under S. 263 of the Act and came to the conclusion that the order of the ITO allowing the aforesaid deduction was erroneous and prejudicial to the interests of the Revenue. The CIT, accordingly, withdrew the said deduction wrongly allowed by the tax officer. Against the said action of the CIT the assessee came up in appeal before the Tribunal. It was contended before the Tribunal that the assessment for the year 1981-82 was the subject-matter of appeal before the CIT (A) and the order of the ITO got merged with the order of the CIT (A) dt. 21st March, 1985 and, hence, in view of the decision of this High Court in General Beopar Co. (P) Ltd. vs. CIT (1987) 59 CTR (Cal) 291 : (1987) 167 ITR 86 the CIT could not pass order under s. 263. On behalf of the Department it was urged that the issue regarding bonus was not before the CIT (A) and, hence, the CIT was competent to revise the order of the ITO on the point of bonus.
(3.) THE Tribunal considered the rival submissions. The Tribunal following the decision of this High Court in the case of General Beopar Co. (P) Ltd. (supra) held that the CIT could not revise the order of assessment dt. 8th Aug., 1981 since it got merged with the order of the CIT (A) dt. 31st March, 1985. Accordingly, the Tribunal set aside the order of CIT passed under S. 263.;