Judgment:
V.K. Singhal, J.
1. The Income-tax Appellate Tribunal, Calcutta Bench 'A' (camp at Jaipur), has referred the following two questions of lawarising out of its order dated May 21, 1981, under Section 256(1) of the Income-tax Act, 1961, in respect of the assessment year 1976-77 :
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the entire surtax assessments having merged in the appellate order of the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax lost jurisdiction to revise the original assessment made in the case of the assessee for the assessment year under consideration ?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the order of the Commissioner of Income-tax under Section 16 of the Companies (Profits) Surtax Act, 1964 ?'
2. The brief facts of the case are that the assessment of the assessee under Section 6(2) of the Companies (Profits) Surtax Act, 1964 (for short, 'the Act of 1964'), was completed by the Income-tax Officer on June 8, 1978. The Commissioner of Income-tax was of the view that the assessment order made by the Income-tax Officer on June 8, 1978 was erroneous inasmuch as it was prejudicial to the interests of the Revenue. The Inspecting Assistant Commissioner (Assessment) was directed to recompute the capital, statutory deduction admissible thereon and the amount of surtax payable by the assessee as per the directions contained in the said order. Before the Income-tax Commissioner, it was contended that the original assessment order made by the Income-tax Officer has merged with the appellate order of the Commissioner of Income-tax (Appeals) and, hence, the power under Section 16 of the Act of 1964 could not be exercised. The contention of the assessee was rejected.
3. The facts of the case are that the assessee preferred an appeal before the Commissioner of Income-tax (Appeals) and as per the order dated March 28, 1980, an order was made on appeal by the assessee which was as under :
'During the hearing of the appeal, the learned representatives for the appellant withdrew the ground No. 1 (II). Hence, it is rejected.'
4. On the basis of the above order of the Commissioner of Income-tax (Appeals), the Appellate Tribunal came to the conclusion that the surtax assessment as a whole has been the subject-matter of appeal before the Commissioner of Income-tax (Appeals) and the assessee has taken a specific ground that the learned Income-tax Officer has not correctly computed the deduction of capital reserves. The said ground has been withdrawn and accordingly was rejected. The withdrawal of a ground of appealamounts to rejection of the ground and, therefore, the subject-matter stood considered by the Commissioner of Income-tax (Appeals).
5. Reliance was placed on the decision of the Allahabad High Court in the case of J. K. Synthetics Ltd. v. Addl. CIT : [1976]105ITR344(All) . The Tribunal cancelled the order of the Commissioner of Income-tax made under Section 16 of the Companies (Profits) Surtax Act, 1964.
6. We have considered the matter. In Ganga Devi v. CWT 0043/1985 it was held by this court that, if the Appellate Assistant Commissioner has not been called upon or has not suo motu dealt with a part of the assessment order passed by the Wealth-tax Officer, there is no question of that part of the order merging or being superseded by the order of the Appellate Assistant Commissioner. The Commissioner of Wealth-tax would be entitled to revise that part of the order.
7. The matter has also been considered by the Patna High Court in CWT v. Sheo Kumar Dalmia : [1986]159ITR845(Patna) where the appeal was withdrawn and it was held that there is no order of the appellate authority so as to attract the doctrine of merger.
8. In the light of the above decision, we are of the considered view that, once the assessee has not pressed a ground of appeal and has withdrawn the same, it would amount to the assessee not having preferred the appeal on that ground and it was not the subject-matter of appeal before the Appellate Assistant Commissioner and there is no effective order of the appellate authority on that point and as such the Commissioner has the jurisdiction to revise the order under Section 16 of the Companies (Profits) Surtax Act, 1964. Accordingly, it is held that the Tribunal was not justified in holding that the entire surtax assessment having merged in the appellate order of the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax lost jurisdiction to revise the original assessment made in the case of the assessee for the assessment year under consideration. It is further held that the Tribunal was not justified in cancelling the order of the Commissioner of Income-tax under Section 16 of the Companies (Profits) Surtax Act, 1964.
9. The reference is accordingly answered in favour of the Revenue and against the assessee. No order as to costs.