SUSANTA CHATTERJEE, J.

(1.) Both the rules were issued on September 26, 1977. The writ petitioner has challenged the notice dated August 17, 1977, issued by the Commissioner of Income-tax (Central) under Section 16 of the Companies (Profits) Surtax Act, 1964, for the assessment year 1971-72 and all proceedings, notices and orders relating thereto and thereunder on the ground that there was no material or circumstance whatsoever before the Commissioner of Income-tax (Central-I) (respondent No. 1) on the basis whereof he could consider that the said assessment for the assessment year 1971-72 under the said Act was, in any way, erroneous and prejudicial to the interests of the Revenue within the meaning of Section 16 of the said Act. It is urged that, on the basis of the allegations made in the said notice, no person properly instructed in law could reasonably consider the said assessment to be erroneous and prejudicial to the interests of the Revenue. A condition precedent necessary to confer jurisdiction upon respondent No. 1 to act and proceed and pass any order under Section 16 of the said Act did not exist and the basic requirements were not satisfied and/or fulfilled. The petitioner has also challenged alleging, inter alia, that respondent No. 1 had acted mechanically without applying his mind either and was influenced by irrelevant and extraneous considerations. It is stated that inasmuch as out of the aggregate dividend of Rs. 78,84,795, the dividend of Rs. 9,30,000 on preference shares had already been adjusted in the profit and loss account itself, and the said amount of Rs. 9,30,000 was not included in the general reserve, there was and could be no question of reducing the general reserve by the said amount of Rs. 9,30,000, as alleged or at all.

(2.) Dr. Pal, learned counsel appearing for the petitioner, has mainly argued that the power conferred upon the Commissioner of Income-tax under Section 16 of the Surtax Act to revise an order passed by the Income-tax Officer is in identical terms with the power conferred under Section 263 of the Income-tax Act, 1961, to revise any order passed by the Income-tax Officer under the Income-tax Act, 1961. In the present case, the challenge of the petitioner is against the notice on the ground that the Commissioner of Income-tax has no jurisdiction and power to issue the said notice as the order passed by the Income-tax Officer, Central Circle, under Section 6(2) of the Surtax Act had been the subject-matter of appeal before the Appellate Assistant Commissioner and the appellate authority having disposed of the said appeal by his order dated December 4, 1976, the order of the Income-tax Officer has merged with the order of the Appellate Assistant Commissioner and the operative order is the order of the Appellate Assistant Commissioner. Hence, the Commissioner of Income-tax has no power to revise the order of the Income-tax Officer which had already merged with the order of the Appellate Assistant Commissioner before the issuance of the purported notice.

(3.) Dr. Pal has also argued by drawing the attention of the court to a decision of the Division Bench of this court in General Beopar Co. (Pvt.) Ltd. v. CIT [1987] 167 ITR 86. [LQ/CalHC/1986/385] The Bench decision mainly followed the judgment of the Supreme Court in the case of Amritlal Bhogilal and Co. Ltd. [1958] 34 ITR 130. [LQ/SC/1958/69] The ratio of the said decision is that when an order of assessment was appealed against, and an order was passed by the appellate authority, there was merger of the assessment order with the appellate order in all respects, including matters which were merely affirmed by the appellate authority. The Supreme Court observed that the law is settled that when an appeal is preferred against an order of assessment, the entire assessment is at large before the Appellate Assistant Commissioner who has jurisdiction and power also to go into the questions which are not the subject-matter of the appeal. The exceptions which have been considered by this court are cases where the questions involved cannot be the subject-matter of appeal before the appellate authority. The attention of the court has also been drawn to the case reported in General Beopar Co. (Pvt.) Ltd. v. CIT [1987] 167 ITR 86 [LQ/CalHC/1986/385] and, in particular, the relevant portion at page 91 and also page 99. It is strongly submitted that if the notice is without jurisdiction, the court will not hesitate to quash the same. There is a reference to the case in Russell Properties Ltd. v. A. Chowdhury.

(4.) Mr. N. L. Pal, appearing with Mr. R. N. Mitra, counsel for the income-tax authorities, argued that there is nothing wrong in the impugned notice. There is no question of lack of jurisdiction. The Income-tax Act and the Surtax Act are complete codes. The petitioner has ample opportunities to place on record all relevant facts in response to the impugned notices and effective adjudication cannot be nipped in the bud by seeking reliefs in the writ court. The acts done and/or caused to have been done by the respondents in issuing the impugned notice are not without jurisdiction and the reliefs sought by the petitioner are unwarranted and uncalled for. The attention of the-court has also been drawn to a decision of the Division Bench of this court in CIT v. Upper Ganges Sugar Mills Ltd. [1985] 154 ITR 308 (sic).

(5.) Having heard learned counsel appearing for the respective parties, the only question before this court to be decided is as to whether the issuance of the impugned notice under Section 16 of the Surtax Act is without jurisdiction or not. The only argument advanced on behalf of the petitioner is that the steps taken by respondent No. 1 to issue the impugned notice are absolutely illegal inasmuch as by applying the test of doctrine of merger of orders, respondent No. 1 cannot revise such orders and the initiation of proceedings of reassessment is otherwise prohibited by law. By looking to the decision in General Beopar Company (Pvt) Ltd. V. CIT [1987] 167 ITR 86 [LQ/CalHC/1986/385] , the Division Bench of this court has found that in an appeal preferred from an order of assessment, the entire assessment is at large before the Appellate Assistant Commissioner who has jurisdiction and power to go into questions which are not the subject-matter of appeal. Thus, when an order of assessment is appealed against, andean order is passed by the appellate authority, there is merger of the assessment order with the appellate order in all respects, including matters which have been merely affirmed by the appellate authority. The Division Bench further observed that the exceptions to this doctrine of merger are cases where the question involved cannot be the subject-matter of appeal before the appellate authority. It was held that where there has been a merger of the order of the Income-tax Officer with that of the Appellate Assistant Commissioner, the Commissioner has no jurisdiction to revise the order of the Income-tax Officer. Once proceedings for reassessment are initiated, the original order of assessment loses its finality and at this stage it is no longer open for revision by the Commissioner.

(6.) While deciding the case of General Beopar Co. (P.) Ltd. v. CIT [1987] 167 ITR 86 [LQ/CalHC/1986/385] , the Division Bench quoted the observation of Chagla C. J. in the case of CIT v. Tejaji Farasram Kharawala [1953] 23 ITR 412 (Bom) [LQ/BomHC/1953/34] (at page 92 of 167 ITR) : "... once an appeal is preferred by the assessee, it is open to the Commissioner to raise before the Appellate Assistant Commissioner any matter dealing with the assessment of the assessee. It is not as if the power of the Appellate Assistant Commissioner is confined to only those questions which have been raised by the assessee. Once this is conceded, it is difficult to understand why the Commissioner would not be precluded from making an order under Section 33B once an order has been passed by the Appellate Assistant Commissioner even though the Appellate Assistant Commissioner did not deal with the matter with which the Commissioner has dealt. The principle underlying Section 33B is that it is only the order of the Income-tax Officer that can be revised by the Commissioner. Once the assessment is confirmed by the Appellate Assistant Commissioner or any order with regard to the assessment has been made by the Appellate Assistant Commissioner, that becomes a final order of assessment, and the only right that the Department has is the right to appeal to the Appellate Tribunal. The right of the Commissioner continues so long as the order of the Income-tax Officer is not merged in the order of the Appellate Assistant Commissioner, but once the order is merged, the Commissioner cannot deal with the assessment of the assessee at all. On appeal, the power to deal with the assessment is given to the Appellate Assistant Commissioner, and further, the power is given to the Appellate Tribunal in appeals from the order of the Appellate Assistant Commissioner. The Commissioner completely goes out of the picture once the Appellate Assistant Commissioner has passed an order in appeal from the decision of the Income-tax Officer."

(7.) The Division Bench has also noticed the observation of the Supreme Court made in the case of CIT v. Amritlat Bhogilal and Co. Ltd. [ 1958] 34 ITR 130 (p. 136). "There can be no doubt that, if an appeal is provided against an order passed by a Tribunal, the decision of the appellate authority is the operative decision in law. If the appellate authority modifies or reverses the decision of the Tribunal, it is obvious that it is the appellate decision that is effective and can be enforced. In law, the position would be just the same even if the appellate decision merely confirms the decision of the Tribunal. As a result of the confirmation or affirmance of the decision of the Tribunal by the appellate authority, the original decision, merges in the appellate decision and it is the appellate decision alone which subsists and is operative and capable of enforcement."

(8.) Thus, looking to the approach of the apex court of the country for appreciating the position of law correctly as to the question of merger, there is no doubt that, once an appeal has been preferred arid the appellate authority has passed an order, there is nothing left for any authority which passed the initial order to reopen the same in the manner sought to be done as in the instant case. The questions raised in this case have been clearly answered by stating that by applying the test of merger, there is nothing left for the respondent authority to issue the impugned notice and to initiate the proceedings. Appreciating the facts and laws as placed before this court, there is no bar and/or impediment to grant the reliefs to the petitioner as prayed for.

(9.) For the foregoing reasons, the writ petitions are allowed. The rules are made absolute. The impugned notice(s) and/or the proceedings thereto and thereunder are hereby quashed. There will be no order as to costs.