1. The petitioner is a public limited company engaged in the business of manufacturing cement and asbestos products. The relevant assessment year is assessment year 1973-74. In the accounting year which ended on December 31, 1972, it exported cement and asbestos products to foreign countries. In its return of income, the petitioner declared the total income at Rs. 45,21,260. The petitioner had claimed weighted deduction under section 35B of the Income-tax Act, 1961, for export markets development on expenses of Rs. 57,988. The Income-tax Officer allowed the claim of the petitioner. As the Income-tax Officer had made additions in the total income of the assessee and had disallowed certain claims made by the assessee, the assessee had preferred an appeal to the Appellate Assistant Commissioner. That appeal was partly allowed. Against that order passed by the Appellate Assistant Commissioner, the petitioner-assessee preferred further appeal to the Tribunal. The Income-tax Officer also aggrieved by that order had preferred an appeal to the Tribunal. The appeal filed by the Income-tax Officer was dismissed and that of the petitioner was partly allowed on November 15, 1978. Ultimately, the petitioner on coming to know of the correct position of law in view of the various decisions of different Benches of the Tribunal that the assessee cannot be denied the benefit of section 35B merely because the expenditure may be incurred in India, made a revision application on March 18, 1977, under section 264 to the Commissioner of Income-tax claiming weighted deduction under section 35B on expenses of Rs. 41,46,009. The expenses which the assessee claimed were in addition to the expenses which the assessee had earlier claimed during the assessment proceedings. The Commissioner, by his order dated February 13, 1979, dismissed that application on the ground that the assessment order for the assessment year 1973-74 was made the subject of an appeal to the Appellate Assistant Commissioner and then to the Tribunal and, therefore, in view of the bar contained in section 264(4), the revision application was not competent. This order passed by the Commissioner is challenged in this petition.
2. What is contended by learned counsel for the petitioner is that the Commissioner has dismissed the revision application filed by the petitioner on an erroneous view of section 264(4) of the Act. He submitted that the claim which the petitioner had made in the revision application was not the subject-matter of assessment either by the Income-tax Officer or by the Appellate Assistant Commissioner. Therefore, it could not have been and in fact it was not the subject-matter of an appeal to the Tribunal. He submitted that for that reason, the revision application filed by the petitioner was not hit by the provisions of Clause (c) of sub-section (4) of section 264 of the Act.
3. In order to appreciate the contentions raised on behalf of the petitioner, it is necessary to refer to section 264 as it stood then and for ready reference, we think it proper to set out the said section. It read as under :
"264. (1) In the case of any order other than an order to which section 263 applies passed by an authority subordinate to him, the Commissioner may, either of his own motion or on an application by the assessee for revision, call for the record of any proceeding under this Act in which any such order has been passed and may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit.
(2) The Commissioner shall not of his own motion revise any order under this section if the order has been made more than one year previously.
(3) In the case of an application for revision under this section by the assessee, the application must be made within one year from the date on which the order in question was communicated to him or the date on which he otherwise came to know of it, whichever is earlier :
Provided that the Commissioner may, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period, admit an application made after the expiry of that period.
(4) The Commissioner shall not revise any order under this section in the following cases -
(a) where an appeal against the order lies to the Appellate Assistant Commissioner or to the Appellate Tribunal but has not been made and the time within which such appeal may be made has not expired or, in the case of an appeal to the Appellate Tribunal, the assessee has not waived his right of appeal; or
(b) where the order is pending on an appeal before the Appellate Assistant Commissioner; or
(c) where the order has been made the subject of an appeal to the Appellate Tribunal.
(5) Every application by an assessee for revision under this section shall be accompanied by a fee of twenty-five rupees.
Explanation 1. - An order by the Commissioner declining to interfere shall, for the purposes of this section, be deemed not to be an order prejudicial to the assessee.
Explanation 2. - For the purposes of this section, the Appellate Assistant Commissioner shall be deemed to be an authority subordinate to the Commissioner."
4. This section empowers the Commissioner, either on his own motion or on an application made by the assessee to call for the record of any proceeding under the Act and pass such order thereon not being an order prejudicial to the assessee. This power has been conferred upon the Commissioner in order to enable him to give relief to the assessee in cases of overassessment. The power is conferred on him in wide terms and as pointed out by this court in C. Parikh and Co. v. CIT [1980] 122 ITR 610 and by the Kerala High Court in Parekh Brothers v. CIT [1984] 150 ITR 105, this power should be exercised by the Commissioner subject to the limitations prescribed in that section to give relief to the assessee in case where after assessment was completed, the assessee detects mistakes on account of which he was over assessed. That power is not confined merely to erroneous orders passed by the lower authorities.
5. Keeping in mind the object of the provisions and width of the power conferred upon the Commissioner, we have to interpret Clause (c) of sub-section (4) of section 264 in order to decide whether the revision application filed by the petitioner was competent or not. The Legislature after having conferred power of revision on the Commissioner in wide terms placed certain restrictions on the exercise of that power. He is prohibited from exercising that power on his own if the order sought to be revised was made more than one year before. He is also prohibited from considering a revision application by an assessee if it is not made within one year from the date on which the order in question was communicated to him or the date on which he otherwise came to know about it, unless the Commissioner finds that for sufficient cause the assessee was prevented from making that application within that period. By sub-section (4) of section 264, he is prohibited from entertaining a revision application if an appeal against an order lies to the Appellate Assistant Commissioner or to the Appellate Tribunal and the assessee has not waived that right of appeal. He is also prohibited from entertaining a revision application where an appeal against the order is pending before the Appellate Assistant Commissioner. It is then further provided that the Commissioner shall not revise any order where the order has been made the subject of an appeal to the Appellate Tribunal.
6. It is an admitted position that if at all any bar comes in the way of the petitioner, it is this bar created by section 264(4)(c). Therefore, what we have to consider in this case is whether the order was made the subject of an appeal to the Appellate Tribunal. The answer to this question will depend upon what meaning is assigned to the word "order" occurring in Clause (c). It was submitted that what could have been made the subject of an appeal to the Appellate Tribunal was the order passed by the Appellate Assistant Commissioner, meaning thereby the points or issues decided by the Appellate Assistant Commissioner either expressly or impliedly which were the subject-matter of appeal before the Appellate Tribunal and not the points or issues which were not at all raised nor considered by the Appellate Assistant Commissioner. In support of this contention, learned counsel relied upon three decisions of this court, viz., (1) CIT v. Karamchand Premchand Pvt. Ltd. [1969] 74 ITR 254; (2) CIT v. Steel Cast Corporation [1977] 107 ITR 683 and (3) CIT v. Cellulose Products of India Ltd. [1985] 151 ITR 499 [FB]. In order to decide the scope and ambit of the jurisdiction of the Tribunal, this court in Karamchand Premchand's case [1969] 74 ITR 254 examined the true nature of an order of the Appellate Assistant Commissioner against which an appeal may be preferred to the Tribunal. While doing so, it examined the powers of the Appellate Assistant Commissioner when an appeal is preferred to him against an order of the Income-tax Officer. This court then observed (at page 261) :
"The powers of the Appellate Assistant Commissioner are not confined to the subject-matter of the appeal but extend to the subject-matter of the assessment. The entire assessment is thrown open before the Appellate Assistant Commissioner and so long as he does not travel outside the matters considered and determined by the Income-tax Officer, he can correct any decision of the Income-tax Officer in the course of the assessment even if the assessee is satisfied with it and has not challenged it in the appeal. But whatever be the points considered and determined by him - whether raised originally in the memorandum of appeal or with leave granted under
section 250, sub-section (5) or considered suo motu - the Appellate Assistant Commissioner must set out in the order 'the points for determination, the decision thereon and the reasons for the decision' - vide
section 250, sub-section (5). The order of the Appellate Assistant Commissioner would thus consist of various decisions on matters which may be raised in appeal by the assessee or considered suo motu by the Appellate Assistant Commissioner and the effect of these decisions would be to confirm or reduce or enhance or annul or set aside the assessment."
7. An appeal can be filed to the Tribunal against the order of the Appellate Assistant Commissioner or any part thereof. The assessee or the Revenue can prefer an appeal to the Tribunal against that part of the order of the Appellate Assistant Commissioner which contains a decision against either of them. The appeal by the assessee or by the Revenue against any part of the order of the Appellate Assistant Commissioner is, therefore, really an appeal against the decisions of the Appellate Assistant Commissioner which are against him and by which he is aggrieved. It is, therefore, imperative that there must be a decision by the Appellate Assistant Commissioner by which the assessee or the Revenue is aggrieved before he can prefer an appeal. A fortiori, if a particular issue or matter is not considered and decided by the Appellate Assistant Commissioner and it does not form part of the order of the Appellate Assistant Commissioner, there can be no appeal against it. This court then examined the principle of merger and on the hypothesis that the principle of merger applies and the order of assessment passed by the Income-tax Officer gets merged in the order of the Appellate Assistant Commissioner, observed that
"even so, we fail to see how it can be said that there was any decision of the Appellate Assistant Commissioner in regard to the disallowance of the third claim when that was admittedly not a matter considered and decided by him"
. This court then made the following pertinent observations (at page 265) :
"Moreover, it is difficult to imagine how an assessee can be heard to say that, though he did not claim any particular relief in the appeal preferred before the Appellate Assistant Commissioner, and the Appellate Assistant Commissioner had therefore no occasion to decide whether such relief should be granted or not, he is still aggrieved by the decision of the Appellate Assistant Commissioner in not granting such relief to him. How can an assessee complain that an order does not grant him a particular relief, when such relief is not claimed by him in the appeal ? How can it be said by an assessee that the Appellate Assistant Commissioner erred in deciding a particular matter against him when no opportunity was given by him to the Appellate Assistant Commissioner even to make such error ? When the assessee seeks to contend in the appeal to the Tribunal that the Appellate Assistant Commissioner erred in deciding a particular matter against him, the question would be : where is the decision of the Appellate Assistant Commissioner deciding the matter against him by which he is aggrieved ? And if there is no such decision, obviously the assessee cannot appeal against it."
8. In Steel Cast Corporation's case [1977] 107 ITR 683, this court observed that in order to decide the extent of jurisdiction of the Tribunal, it must be found out what is the subject-matter of appeal and that can be determined only by finding out what the Appellate Assistant Commissioner expressly or impliedly decided. What is meant by implied decision is that though a point might have been raised before the Appellate Assistant Commissioner, in his final order the Appellate Assistant Commissioner might not have dealt with that point and thereby impliedly rejected it. A party may be aggrieved by an express decision of the Appellate Assistant Commissioner or by an implied decision of the Appellate Assistant Commissioner. The subject-matter of the appeal before the Tribunal can only be the decision, express or implied, of the Appellate Assistant Commissioner and the jurisdiction of the Tribunal is restricted to the subject-matter of the appeal. This court in its Full Bench decision in Cellulose Products' case [1985] 151 ITR 499, held that the scope of appeal before the Tribunal also extends to the subject-matter of the appeal before the Appellate Assistant Commissioner and it is the scope of relief sought by the assessee which determines the subject-matter of an appeal.
9. As regards the doctrine of merger, this court is Karsandas Bhagwandas Patel v. G. V Shah, ITO [1975] 98 ITR 255, has observed (at page 266) :
"Now, it is true that these observations recognised the applicability of the principle of merger in income-tax proceedings but if we scrutinies these observations closely, it will be apparent that they do not lay down any absolute rule that in every case, where there is an appeal, the original order made by the inferior authority merges wholly in the order of the appellate authority regardless of the subject-matter of the decision in the appeal. The principle of merger does undoubtedly apply but that is only where a decision reached by an inferior authority is reversed, modified or even confirmed by the appellate authority. The decision of the inferior authority in such a case is superseded by or merged in the decision of the appellate authority. But this principle has no application where a decision of an inferior authority does not come in for consideration by the appellate authority and there is no decision of the appellate authority either by way of affirmance or by way of reversal or modification on the point decided by the inferior authority. The decision of the inferior authority in such a case stands intact for there is no decision of the appellate authority on the point in which the decision of the inferior authority can be regarded as having merged."
10. It is then observed (at page 267) :
".......... for the purpose of determining the applicability of the principle of merger in a case like the present, the test which has to be applied is whether the decision of the Income-tax Officer on a particular point is the subject-matter of appeal before the Appellate Assistant Commissioner. It may not be the subject-matter of appeal for two reasons, either because the Appellate Assistant Commissioner has no jurisdiction to consider that the subject-matter as in the case before the Supreme Court or because the Appellate Assistant Commissioner though having jurisdiction to examine that the subject-matter does not do so. In either case there being no decision of the Appellate Assistant Commissioner on the point, the decision of the Income-tax Officer remains untouched and it is open to the Commissioner in exercise of power under section 33B to revise it or to the Income-tax Officer in exercise of power under
section 35, sub-section (1), to rectify it if there is a mistake apparent from the record of the assessment."
11. In short, this court held that in a case where there is no decision of the Appellate Assistant Commissioner on a point decided by the Income-tax Officer or on a point not raised before the Income-tax Officer, then the order of the Income-tax Officer does not get fully merged in the order of the Appellate Assistant Commissioner.
12. Relying upon these decisions, it was submitted by learned counsel that as the petitioner had not made any claim for weighted deduction under section 35B in respect of expenditure of Rs. 41,46,009, there was no decision of the Income-tax Officer on this point nor had the Appellate Assistant Commissioner gone into that question either at the instance of the petitioner or on his own and, therefore, there was no decision of the Appellate Assistant Commissioner also on this point. The petitioner had, therefore, not raised this point in appeal as it could not have been made the subject-matter of the appeal and, therefore, even after applying the principle of merger, it cannot be said that the order was made the subject of an appeal before the Tribunal. In support of this contention, learned counsel relied upon the decision of this court in C. Parikh and Co.'s case [1980] 122 ITR 610 and also of the Kerala High Court in Parekh Brothers' case [1984] 150 ITR 105. In the case of Parekh Brothers [1984] 150 ITR 105 (Ker), the facts were to some extent similar and, therefore, we will refer to that decision again. In that case also, the assessee had claimed weighted deduction under section 35B before the Income-tax Officer. The claim of the assessee was substantially accepted. Against certain deductions disallowed by the assessing authority, the assessee preferred an appeal before the Appellate Assistant Commissioner. That appeal was allowed. Thereafter, the assessee discovered that it had inadvertently omitted to claim certain deductions to which it was entitled to under section 35B. Therefore, the assessee made an application to the Income-tax Officer for rectification of the assessment by granting further deductions under section 35B. That claim was neither made in the return nor at the time of hearing before the Income-tax Officer or the appellate authority. As the assessee's request for rectification was rejected, the assessee preferred a revision application under section 264 of the Act. That application was rejected on the ground that
"it cannot be said that the quasi judicial powers of the Commissioner of Income-tax under section 264 are so wide that it is open to him for the first time to entertain a claim for relief of this kind when the assessee, on account of its negligence, had omitted to make the claim before the lower authorities"
. The Kerala High Court held that the scope of the appellate powers specified in
section 251 of the Income-tax Act and the scope of the revisional power vested in the Commissioner under
section 264 of the Income-tax Act are entirely different. It further held that the revisional jurisdiction may be a part of or a species of appellate jurisdiction, and not part of original jurisdiction. On that basis, it does not follow that all powers so exercisable by the appellate authority with all limitations inherent therein as enunciated by the above Supreme Court decision will be equally applicable in construing the scope and content of the revisional power under section 264 of the Act. It further held that the power conferred under section 264 is not limited to cases where there is an erroneous order passed by the subordinate authority. The power of revision can be exercised even in cases where no claim was put forward before the Income-tax Officer and such claim is made for the first time after the Income-tax Officer passes the order of assessment.
13. The Kerala High Court held that the Commissioner committed an error of law in holding that it was not open to him for the first time to entertain the relief of the kind sought by the assessee and denying the jurisdiction. Thus, the Kerala High Court has in terms held that even though a mistake was committed by the assessee and even though such mistake was detected after the order of assessment and for that reason the order of assessment cannot be said to be erroneous, nevertheless, it was open to the assessee to file a revision before the Commissioner under section 264 and claim appropriate relief. The only difference between the facts of that case and this case is that, whereas in the case before the Kerala High Court, no appeal before the Tribunal was filed, the assessee in this case had preferred an appeal to the Tribunal. But, in our opinion, that should not make any difference in view of what we have stated above and what follows hereafter.
14. Relying upon this judgment, it was urged on behalf of the petitioner that in this case, the assessee had not claimed weighted deduction on expenditure of Rs. 41,46,009 before the Income-tax Officer as the assessee believed that no deduction could be claimed on this expenditure. As the assessee had not made such claim before the Income-tax Officer, in the appeal before the Appellate Assistant Commissioner also, no such claim was made. The Appellate Assistant Commissioner of his own also did not examine this point and he did not give any decision thereon. The appeal which the assessee preferred before the Tribunal was against those decisions of the Appellate Assistant Commissioner which were against the assessee. Therefore, only that part of the order of the Appellate Assistant Commissioner which went against the assessee was made the subject of an appeal before the Tribunal. Whether the assessee was entitled to weighted deduction on the expenditure of Rs. 41,46,009 was not decided either expressly or impliedly by the Appellate Assistant Commissioner and, therefore, it was not the subject-matter of an appeal either by the assessee or by the Income-tax Officer before the Tribunal. Therefore, it cannot be said that this was a case where the order was subjected to an appeal before the Tribunal.
15. On the other hand, learned counsel for the Revenue submitted that the bar of section 264(4)(c) will not apply only in those cases where no appeal is filed against an order of the Income-tax Officer. If against the order of assessment passed by the Income-tax Officer, an appeal was filed and if the matter was further carried in appeal before the Tribunal, then it can be said that the order which is sought to be revised was subjected to an appeal before the Tribunal. He submitted that what the assessee in this case sought to challenge in the revision application was the order of assessment and the said order of assessment was subjected to an appeal before the Appellate Assistant Commissioner in the first instance and then before the Tribunal. He submitted that the order must be given its full meaning and it should not be interpreted as a part of the order. In support of his contention, he relied upon the decision of the Madras High Court in C. Gnanasundara Nayagar v. CIT [1961] 41 ITR 375, wherein it is held that "an order of assessment cannot be revised by the Commissioner on an application by the assessee under section 33A(2) of the Income-tax Act, if an appeal has been preferred against that order to the Appellate Tribunal. The bar against revision remains unaffected by the scope of the appeal preferred to the Tribunal, whether it is restricted by the assessee of his own choice or whether it is restricted by the Tribunal. That the relief claimed in the application for revision under section 33A(2) was not the subject-matter of the appeal to the Tribunal does not alter the position that the order of assessment was the subject of the appeal". The word "order" would mean an order appealed against and not the relief claimed in the appeal. The Madras High Court was concerned with the interpretation of clause (c) of section 33a(2) - of the 1922 act which was similar to Clause (c) of sub-section (4) of section 264. Interpreting the word "order" appearing in clause (c), the Madras High Court held that the word "order" in clause (c) of the proviso to section 33A(2) refers to the order appealed against and not to the relief claimed in the appeal. It, therefore, held that under clause (c) of the proviso, an appeal being preferred to the Tribunal is enough to bar the exercise of revisional jurisdiction. With due respect, it is not possible to agree with the view taken by the Madras High Court as it appears that the Madras High Court overlooked the aspect that clause (c) contemplated an order against which an appeal can be preferred before the Tribunal. It would have been futile to provide that if an order which is not appealable is made subject of an appeal to the Tribunal, then also, revision would be barred. It is implicit in the provision that the order which was made the subject of an appeal was such against which appeal could have been preferred to the Tribunal. We are of the opinion that the word "order" has to be given purposive interpretation. The Madras High Court has put a narrow interpretation on the word "order" and that interpretation obviously would not achieve the purpose for which such provision was made, viz., to give relief to the assessee in a case of overassessment even in a case where initially no claim was made before the Income-tax Officer.
16. He next relied upon a decision of the Kerala High Court in the case of H. A. Mohammed Haneef v. ITO [1973] Tax LR 645. In that case, the Kerala High Court has held that
"The principle underlying the prohibition seems to be that an order of the Appellate Assistant Commissioner merges in the order of the Appellate Tribunal; and in such a ease the order of the Appellate Assistant Commissioner would not be there for being revised by the Commissioner; and he should not be permitted directly or indirectly to interfere with the order of the Appellate Tribunal under the colour that he is revising the order of the Appellate Assistant Commissioner"
. The point which arises in the present petition did not really arise before that court and, therefore, that judgment is not applicable. The contention which was raised in that case was that the fact that one party filed an appeal before the Tribunal from the order of the Appellate Assistant Commissioner would not affect the right of the other party to file a revision from the same order before the Commissioner. It was in that context that the Kerala High Court made the said observations.
17. Heavy reliance was placed by learned counsel for the Revenue upon the decision of the Karnataka High Court in the case of CIT v. Hindustan Aeronautics Ltd. [1986] 157 ITR 315 [FB], wherein the Karnataka High Court held that (headnote) :
"The Appellate Assistant Commissioner can look into and adjudicate upon findings recorded by the Income-tax Officer not only against the assessee which may expressly be the subject-matter of an appeal but also upon a matter which has been considered and determined by the Income-tax Officer in the course of the assessment. In other words, the entire subject-matter of the assessment would be within the jurisdiction of the Appellate Assistant Commissioner.
Where the order of the Appellate Assistant Commissioner has been the subject-matter of appeal before the Tribunal, section 264(4) is an express bar for the Commissioner to entertain the revision petition."
18. The Karnataka High Court, referring to clause (c) of section 264(4), has held that (headnote) :
"It is in the nature of an injunction against the Commissioner. The bar imposed by this provision is express and absolute irrespective of the relief claimed in such an appeal or irrespective of the party who has preferred the appeal before the Tribunal. That clause does not envisage that the appellant before the Tribunal and the petitioner before the Commissioner should be the same."
19. The reason given by the Karnataka High Court for taking that view is that it has in its decision in Addl. CIT v. Vijayalakshmi Lorry Service [1986] 157 ITR 327 held that the entire order of the Income-tax Officer merges when the order is taken in appeal and is modified by the Appellate Assistant Commissioner. The Karnataka High Court further held that there was no compelling reason for it to review that decision. The interpretation which the Karnataka High Court has placed upon clause (c) of section 264(4) is based upon its earlier view that the order of the Income-tax Officer merges when an appeal is preferred to the Appellate Assistant Commissioner and the Appellate Assistant Commissioner modifies the order of the Income-tax Officer. This High Court has taken a different view, viz., that that part of the order of the assessment which relates to items not forming the subject-matter of the appellate order which is left untouched does not merge in the order of the Appellate Assistant Commissioner. Therefore, with due respect to the Karnataka High Court, we cannot follow the decision in the case of Hindustan Aeronautics Ltd. [1986] 157 ITR 315 [FB].
20. Learned counsel for the Revenue also relied upon the decision of the Supreme Court in the case of CWT v. Mrs. Kasturbai Walchand [1989] 177 ITR 188, wherein the Supreme Court has held that (headnote)
"Where an appeal is filed before the Appellate Tribunal against an order of the Appellate Assistant Commissioner, the impugned order merges in the order of the Appellate Tribunal when the appeal is disposed of on the merits. If, meanwhile, a revision application is filed before the Commissioner against the same order of the Appellate Assistant Commissioner, it will not be open to the Commissioner to pass any order in revision against the order of the Appellate Assistant Commissioner. It is immaterial that the appeal and the revision application have not been filed by the same party"
. It is difficult to appreciate how this judgment can be of any help to us. Appeal to the Tribunal can be filed only against a decision which is adverse to the party. Once such appeal is filed and is disposed of on the merits, obviously that party cannot invoke the revisional jurisdiction of the Commissioner in respect of the decision or order which was challenged by that party to the Tribunal.
21. Learned counsel for the Revenue also relied upon a decision of the Kerala High Court in the case of Mount Senai Hospital v. ITO [1992] 193 ITR 772. No reason is given by the Kerala High Court for taking the view that if the order has been made the subject-matter of an appeal to the Commissioner of Income-tax, then no revision will lie to the Commissioner.
22. So far as this court is concerned, it has consistently taken the view that if the assessee has not raised any point before the Appellate Assistant Commissioner in appeal and if the Appellate Assistant Commissioner does not consider and decide the point not raised by the assessee, then that part of the order which remains untouched would become final and would not get merged in the order passed by the Appellate Assistant Commissioner. So far as appeal to the Tribunal is concerned, an appeal can be filed only on a point raised and decided by the Appellate Assistant Commissioner or that point not raised by the assessee but decided by the Appellate Assistant Commissioner, but no appeal can be filed to the Tribunal on the point which was not raised before the Appellate Assistant Commissioner or decided by the Appellate Assistant Commissioner. It is in this context that we have to interpret the words "the order has been made the subject of an appeal" occurring in clause (c) of section 264(4). What is submitted on behalf of the Revenue was that we should give the same meaning to the word "order" and the order would mean ordinarily the whole order or even part of an order and even if a part of the order was under appeal, then it can be said that order was subject of an appeal. In our opinion, such a contention cannot be accepted as that would be inconsistent with the scheme of the Act and what we have stated above with respect to the scope of the appeal before the Tribunal. We cannot also accept the contention on behalf of the Revenue that in view of the statutory bar contained in section 264(4)(c), we cannot proceed on the basis that that part of the order of the Income-tax Officer remains intact if against that part, the assessee has not appealed nor was it considered and modified by the Appellate Assistant Commissioner in appeal of his own. In our opinion, this contention is rather misconceived as what we have to find out is whether the order against which a revision application is preferred was the subject of an appeal before the Tribunal. As we have pointed out above, the order of the Income-tax Officer which remains intact meaning thereby that it was not the subject-matter of appeal, could never have been made the subject of an appeal to the Tribunal because such appeal would not be maintainable. Therefore, in our opinion, what clause (c) contemplates is that the order or that part of the order which was made the subject of an appeal to the Tribunal and that would obviously mean an order that could have been made the subject of an appeal and certainly not that part of the order against which no appeal could have been filed. In this case, it is an admitted fact that the assessee had not made any claim before the Income-tax Officer in respect of the claim which was made before the Commissioner for the first time. Thus, there was no decision of the Income-tax Officer on that point and such a claim was not at all considered by the Appellate Assistant Commissioner while hearing the appeal against the order passed by the Income-tax Officer. Thus, there was no decision of the Appellate Assistant Commissioner on this point. Neither the assessee nor the Revenue could have, therefore, filed any appeal before the Tribunal in that behalf. We are, therefore, of the opinion that the revision application was not barred because of the provisions of section 264(4)(c).
23. In the alternative, it was submitted that the assessee not having made any claim before the Income-tax Officer, there was no order of the Income-tax Officer in this behalf and, therefore, section 264 could not have been invoked by the assessee. What was submitted was that a revision application would lie only against the order of the Income-tax Officer and if there was no order of the Income-tax Officer with respect to the claim made before the Commissioner, the revision would not be maintainable. We are concerned in this case with the order of assessment and not with any other type of order. What in fact the assessee did by filing the revision application before the Commissioner was to challenge the order of assessment on the ground that it was erroneous. It may be that the error was committed not by the Income-tax Officer but by the assessee and that error was detected by the assessee later on. But that certainly cannot preclude the assessee from challenging the order of assessment on the ground that the order was erroneous inasmuch as, under the law, deduction under section 35B ought to have been granted to the assessee. The power of revision under section 264 cannot be restricted to such erroneous orders which have become erroneous as a result of some error committed by the Income-tax Officer while passing the orders. Independently of any decision or absence of any decision on the part of the Income-tax Officer, the order of assessment can be challenged as erroneous if, for example, some provision was overlooked not only by the assessee but also by the Income-tax Officer. Even in such a case, the order of assessment can be challenged by filing a revision application before the Commissioner. Therefore, even this contention raised on behalf of the Revenue deserves to be rejected.
24. As we are of the opinion that the revision application filed by the assessee was maintainable, the Commissioner ought to have entertained the same and decided the same on the merits. As he has failed to do so and as he has rejected the revision application on the ground that it was not maintainable, the said order passed by him deserves to be quashed.
25. In the result, we allow this petition. The impugned order dated February 13, 1979, passed by the Commissioner is quashed and set aside and he is directed to hear the revision application on the merits and decide the same in accordance with law. Rule is made absolute. No order as to costs.