V.K. Singhal, J. - (1.) THE Income-tax Appellate Tribunal, Bombay Bench 'E', has referred the following question of law for the decision of this court in respect of the assessment years 1968-69, 1969-70 and 1970-71 : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Income-tax Officer's orders have merged in the Appellate Assistant Commissioner's order and that the Commissioner of Income-tax had no jurisdiction under Section 263 of the Income-tax Act in this case ?"
(2.) THE assessment under Section 143(3) of the Income-tax Act, 1961, in respect of three years was finalised and, thereafter, on perusal of the record, the Commissioner of Income-tax was of the view that the assessment orders framed were prejudicial to the interests of the Revenue. Notices were issued to the assessee and, after hearing the assessee, the said assessment orders were set aside with a direction to make fresh assessment in accordance with law keeping in view the observations made in the order of the Commissioner of Income-tax. Various points were disputed therein including the sale of shares which are alleged to be at a figure less than the market value, the assessment of the property income and of the capital gains, etc. In respect of the assessment year 1970-71, on account of not including the rental income of the palace property which were meant for official residence of the assessee, further directions were given to make fresh assessment order. THE assessee challenged the orders passed by the Commissioner of Income-tax before the Income-tax Appellate Tribunal, Bombay Bench 'E', and the main contention which was taken was that the orders of assessment have merged in the appellate order of the Appellate Assistant Commissioner and, therefore, the Commissioner of Income-tax has no jurisdiction to revise the assessment because the said orders could not be considered to be the orders of the Income-tax Officer. It was argued that though the issues before the Appellate Assistant Commissioner in appeal were different and not the points considered by the Commissioner in his order, still for the purpose of the Commissioner's jurisdiction, the order of the Income-tax Officer should be held to have merged with the order of the Appellate Assistant Commissioner and could no longer be regarded as the orders of assessment made by the Income-tax Officer. Submissions with regard to the various points referred to by the Commissioner of Income-tax in his order under Section 263 were also made on the merits from both the sides, but the decision was given only on the point as to whether there is a merger of the assessments order with that of the appellate order, irrespective of the fact that the said points were not the subject-matter of dispute in the appeals. THE Income-tax Appellate Tribunal has held that there is no dispute that the assessments concerned were the subject-matter of appeals before the Appellate Assistant Commissioner and were disposed of by him by the time the Commissioner resorted to proceedings under Section 263, the Commissioner has no jurisdiction to exercise his power under Section 263 because the orders of the Income-tax Officer ceased to be his orders and got merged in the order of the Appellate Assistant Commissioner. With regard to various other points raised in the orders passed by the Commissioner of Income-tax under Section 263, it was observed by the Tribunal that, in view of the decision taken, it will not be necessary to go to the other contentions raised by the assessee but still one of such contentions raised was decided, namely, that the Commissioner has wrongly proceeded that the rule of primogeniture applies to the assessee's case. On this point, it was held that the order of the Commissioner of Income-tax has not brought on record any material which could form the basis of his belief that the assessee's case is governed by the custom of impartibility and the rule of primogeniture. Even in his order, he does not deal with the specific claim made by the assessee that the rule of primogeniture does not apply in his case and that he is not the holder of an impartible estate, not to speak of adducing any material which would justify his assumptions. So far as the other questions, namely, the sale of shares at a value less than the market value, capital gains, etc., were concerned no decision was given by the Tribunal. Learned counsel for the assessee has submitted that regarding the finding of the Tribunal about the applicability of the rule of primogeniture, the same has not been referred by the Income-tax Appellate Tribunal under Section 256(1) and, therefore, the above question which has been referred is only academic and that this court should not pass any order and should declare that the above question is only academic in nature. The arguments of both learned counsel were heard. We are of the view that the view taken by the Income-tax Appellate Tribunal with regard to the theory of merger is not in consonance with law, This court has considered this aspect in the case of Ganga Devi v. CWT [1987] 166 ITR 325 (Raj), and after considering various judgments on the point, it was held (at page 344) : "We, therefore, hold that in the facts and circumstances of the case, the Commissioner of Wealth-tax had jurisdiction to act under Section 25(2) of the Act in view of the fact that part of the assessment order was only the subject-matter of consideration before the Appellate Assistant Commissioner. In other words, only that part of the order of the Wealth-tax Officer which was not made the subject-matter of appeal before the Appellate Assistant Commissioner by the assessee and which he had not examined suo motu did not get merged in the order of the Appellate Assistant Commissioner and, therefore, the Commissioner of Wealth-tax was entitled to pass an order under Section 25(2) of the Act In this connection, the decision arrived at by the Tribunal in favour of the Revenue and against the assessee, is correct." In view of the above decision, that part of the order of the Income-tax Officer which was not made the subject-matter of appeal before the Appellate Assistant Commissioner by the assessee and which he had not examined did not get merged in the order of the Appellate Assistant Commissioner. There is a clear finding recorded by the Tribunal that the issues before the Appellate Assistant Commissioner in appeal were different and not the points considered by the Commissioner in his orders. As such, there is no merger of the order and, therefore, the Tribunal was not justified in holding that the Commissioner of Income-tax has no jurisdiction to pass an order under Section 263 of the Income-tax Act, 1961. The order passed by the Income-tax Appellate Tribunal is, therefore, not in accordance with law and the reference is answered in favour of the Department and against the assessee by holding that the orders of the Income-tax Officer have not merged in the order of the Appellate Assistant Commissioner and the Commissioner of Income-tax had jurisdiction to set aside the said orders under Section 263 of the Income-tax Act. It is, however, observed that the matter with regard to primogeniture was decided by the Tribunal on the merits and, therefore, in the absence of a separate question in respect thereof, no decision can be given by this court. It was for the Revenue to have approached this court if the said question was not allowed to be referred by the Income-tax Appellate Tribunal and the Department having failed to do it, the order of the Income-tax Appellate Tribunal on that point alone has become final- The Income-tax Officer is bound by the decision given by the Tribunal on the point of rule of primogeniture and with regard to other points, he will be free to pass an order in accordance with law, after hearing the assessee. No order as to costs. ;