Y.R.Meena, J. - (1.) As per directions of this court, on an application under Section 25G(2) of the Income-tax Act, 1961, the Tribunal was directed to refer the following question for our opinion : "Whether, on the facts and in the circumstances of the case, the orders passed by the Commissioner of Income-tax under Section 265 of the Income-tax Act, 1961, relevant to the assessment years 1980-81 and 1981-82 are legal and valid ?" The assessee-company derives its income from business as an investment company. The assessment years involved are 1980-81 and 1981-82.
(2.) The original assessment for the above assessment years were completed on December 22, 1982 and March 23, 1983, respectively. In a search at the premises of the assessee on September 23, 1983, certain papers were seized and on the basis of those papers and on a perusal of the assessment proceedings for the above referred years, the Commissioner of Income-tax had initiated proceedings under Section 263 of the Act, he found that the assessment orders passed by the Income-tax Officer for these years are erroneous and prejudicial to the interests of the Revenue. That order of the Commissioner of Income-tax under Section 263 has been challenged by the assessee before the Tribunal. The Tribunal has given a categorical finding that neither the order of the Income-tax Officer was erroneous nor prejudicial to the interests of the Revenue. One more reason has been given by the Tribunal that the order of the Income-tax Officer for the assessment year 1980-81 that order of the Income-tax Officer merged with the order of the Commissioner of Income-tax (Appeals). Therefore, thereafter the Commissioner of Income-tax has no power to revise the assessment order under Section 263 of the Act which has already merged with the order of the Commissioner of Income-tax (Appeals).
(3.) On a reference application under Section 256(1) of the Income-tax Act, 1961, the following question was proposed for reference to the Tribunal : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the Income-tax Officer, while completing the assessment for the assessment years 1980-81/1981-82 committed no error prejudicial to the interests of the Revenue and in that view cancelling the order of the Commissioner of Income-tax passed under Section 263 of the Income-tax Act, 1961 for the assessment year1980-81/1981-82 ?" The Tribunal by its order dated January 19, 1987, rejected the application on the ground that the Income-tax Officer had applied his mind while making the assessment and had allowed the amount in question correctly and whether the claim was allowed rightly or not, was a question of fact. For the assessment year 1980-81, the application was also rejected on the ground that when the order of the Income-tax Officer was merged with the order of the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax thereafter had no authority to revise that order and that reasoning has not been challenged in the form in the application under Section 250(1) or (2) question. Therefore, the reference for 1980-81 on the ground whether the Tribunal was justified in holding' that the order of the Income-tax Officer was neither erroneous nor prejudicial to the interests of the Revenue, becomes a question of academic interest.;