Once an appeal against the order passed by an authority is preferred and is decided by the appellate authority, the order of the said authority merges into the order of the appellate authority; with this merger, order of the original authority ceases to exist and the order of the appellate authority prevails; the limitation for the purpose of section 154(7) is to be counted from the date of this order of CIT (A) and not the date of original order of assessment.
Once we opine that the assessment order had merged with the order of CIT(A) passed on 28.6.2004, the limitation for the purpose of sub-section (7) of Section 154 is to be counted from this date.
No doubt, the rectification order passed under Section 154 would mean the assessment order as rectified and the assessment order is not obliterated thereby. However, what would be the position when assessment order is not challenged and amended by the appellate authority. Once rectification order under Section 154 of the Act is passed it would mean that the appeal effect order is rectified.
The Tribunal misdirected itself in law by calculating limitation under Section 154(7) of the Act with reference only to the date of original order of assessment.
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IN THE HIGH COURT OF DELHI AT NEW DELHI
ITA No. 196 of 2009
Reserved on : September 24, 2009
Pronounced on : October 09, 2009
Commissioner of Income Tax, Delhi -IV . . . Appellant
through : Ms. Prem Lata Bansal, Advocate
VERSUS
Tony Electronics Limited . . . Respondent
through : Mr. Satyen Sethi with Mr. Manu K. Giri, Advocates
CORAM : MR. JUSTICE A.K. SIKRI and MR. JUSTICE VALMIKI J. MEHTA
J U D G M E N T
Per A.K. SIKRI, J.
1. An interesting question of law relating to the limitation of correcting error under Section 154 of the Income Tax Act, 1961 (hereinafter referred to the “Act”) arises in this appeal. The issue is: from which date the period of limitation provided under Section 154 of the Act is to be reckoned.
2. The assessment order was framed by the Assessing Officer (AO) under Section 143(3) of the Act on 24.11.1998 framing the income at Rs.8.77 crores. While doing so, the AO had made various additions, which were not palatable to the respondent/assessee. The respondent/assessee filed appeal against that order. The Commissioner of Income Tax (Appeal), vide his order dated 20.5.1999, gave partial relief to the assessee. The matter had gone to the CIT (A) again and, therefore, order recording appeal effects had to be passed three times. The relevant dates in this behalf are tabulated as under :-
