BANERJEE, J. - (1.) THE following question of law has been referred to this Court by the Tribunal under S. 256(1) of the IT Act, 1961 ('the Act') : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the order of IAC to the extent of the mistake in calculating the amount disallowable under s. 44C of the IT Act, 1961 should be deemed to have merged with the order of the CIT(A) and consequently, the CIT had no jurisdiction to initiate proceeding under S. 263 of the IT Act and in that view in partly allowing the appeal of the assessee?"
(2.) THE assessment year involved in this reference is the asst. yr. 1977-78, for which the relevant period of account is the period ending on 31st Dec., 1976. The point of controversy in this case is whether the subject-matter of refund was also under consideration before the appellate authority. In this case, the CIT sought to invoke the provisions of S. 263 of the Act in respect of the assessee's claim under S. 44C of the Act. The ITO, it appears had made certain addition under S. 44C. The assessee preferred an appeal before the appellate authority and the appellate authority had considered the scope and applicability of the S. 44C extensively. When the matter brought before the Tribunal, the Tribunal also found that : "In these circumstances, we got hold of the relevant part of the order from the file of the department. Therein we noticed that the question of applicability of S. 44C was certainly in dispute before the CIT (A) because the assessee had challenged the applicability of this section altogether. The CIT (A) upheld the applicability but did not interfere in the amount disallowable because according to him, there was no dispute about the calculation of the amount. However, even if the CIT(A) has not considered this the fact remains that the question of applicability of S. 44C being in dispute the CIT(A) could have considered correctness of calculation also and the ITO could have pointed out to him since the dispute was before him."
(3.) SO , it is clear that this question was considered by the AAC and such, on this point there was a question of merger.;