1. The prayer in this Original Petition is to quash Exts. P1 and P4 orders passed by the respondents and for the issuance of a writ of mandamus or any other appropriate writ, order or direction compelling the respondents not to make the additions of Rs. 90,000/.-Rs. 15,972/- and Rs. 21,706/- as they are unjustified and against the provisions of law and for other incidental reliefs.

2. The facts of the case may be briefly stated as follows: For the assessment year 1979-80 the petitioner filed a return declaring a total income of Rs. 6,92,290/-. The second respondent Income Tax Officer determined the income at Rs. 9,77,860/- and in arriving at the total income the Incometax Officer made an addition of a sum of Rs. 1,27,678/- as per Ext. P1 assessment order being income from undisclosed sources. Aggrieved by Ext. P1 order the petitioner filed an appeal before the Commissioner of Income Tax (Appeals) who refused to entertain the same and dismissed the appeal in limine for non-payment of admitted tax without any good or sufficient reason, as per Ext. P2 order. The petitioner took up the matter under second appeal before the Appellate Tribunal and the Tribunal also without going into the merits of the case, dismissed the appeal in limine as per Ext. P3 order affirming the findings of the Commissioner of Income-tax (Appeals) that the petitioner had failed to pay the admitted tax without any good or sufficient reason. Thereafter, the petitioner filed a revision petition before the first respondent against Ext. P1 order. The said revision petition was dismissed by the first respondent as per Ext. P4 order on the ground inter-alia that the petitioner's case is covered by S. 264(4)(a) of the Income Tax Act, 1961 and not by S. 264(4)(c) as contended by the petitioner. The challenge in the instant Original Petition is against Ext. P4 order of the first respondent. The question for consideration is whether the revision petition filed by the petitioner before the first respondent is maintainable under S. 264 of the Income Tax Act. The petitioner would contend that where an appeal is dismissed in limine instead of on merits, a revision under S. 264 is maintainable and it is not hit by any of the fetters created against the revision in the said section. The petitioner would further submit that the fetter created by S. 264(4)(c) of the Income Tax Act to the effect that the Commissioner shall not revise any order under S. 264 of the Act where ‘the order has been made the subject ofan appeal’. Commissioner (Appeals) or to the Appellate Tribunal applies only where the appeals has been effectively and finally disposed of on merits and not in a case where the appeal has been disposed of in limine without going into the merits as in the instant case. The petitioner has a further case based on the circular No. 367 dated 26th-July, 1983 issued by the Board according to which the Board are of the view that an order cannot be said to have been made ‘subject of an appeal’ if the appeal has been disposed of by the Commissioner (Appeals) or the Appellate Tribunal without passing an order under S. 251(1) or 254(1) on merits.

3. In reply, the learned counsel for the revenue submit that the case comes squarely within the mischief of S. 264(4)(a) of the Income Tax Act since the petitioner has not waived his right of appeal. He would further submit that the petitioner has filed an appeal and it has been disposed of on merits. He has a further submission that Ext. P1 order has merged with Ext. P4 with the result that now Ext. P1 is not in existence and Ext. P4 being an order passed by the Tribunal, the Commissioner has no jurisdiction to revise the said order.

4. Having considered the rival contentions, I am of the view that an order can be said to be “the subject of an appeal” only if the appeal was considered and disposed of on merits; so much so an appeal which was dismissed as withdrawn at the instance of the assessee or where an appeal was dismissed on the ground that the same was incompetent or where an appeal wa dismissed as barred by limitation or where the appeal was dismissed for non-payment of undisputed tax as a condition precedent for entertaining the appeal cannot be said to have been made “subject of an appeal”.

5. Learned counsel for the petitioner placed strong reliance on the decision of the Supreme Court reported in (1973) 31 STC 434 (Board of Revenue, Madras v. Raj Brothers Agencies) where the identical expression the order made “subject of an appeal” was construed by the Supreme Court to mean “subject of an effective appeal”. There, the facts of the case lie within a narrow compass. The assessee was assessed to sales tax during the assessment years 1960-61 and 1961-62. Aggrieved by the orders of the assessing authorities, he went up in appeal to the Appellate Asst. Commissioner who dismissed his appeals. Thereafter, theassessee filed second appeals to the Sales Tax Appellate Tribunal, Madras. Those appeals were dismissed as having been time-barred. After the Tribunal dismissed the appeals, the assessee moved the Board of Revenue under S. 34(1) of the Madras General Sales Tax Act to revise the assessment orders. The Board held that it has no jurisdiction to entertain those revision petitions. The High Court, in the writ petitions filed at the instance of the assessee held that the Board had jurisdiction to entertain those revision petitions and consequently issued a writ of mandamus to the Board to entertain the revision petitions and consider them on merits. Being aggrieved by the said decision of the High Court, the State approached the Supreme Court in appeal and the Supreme Court was called upon to determine the true scope of S. 34 of the Madras General Sales Tax Act, 1959 which confers on the Board of Revenue suo-motu power to call for and examine an order passed or proceeding recorded by the appropriate authorities under some of the provisions of the Act. S. 34(2) reads thus:

“The Board of Revenue shall not pass an order under sub-section (1) if—

(a) the time for appeal against that order has not expired; or

(b) the order has been made the subject of an appeal to the Appellate Tribunal or for a revision in the High Court; or

(c) more than four years have expired after the passing of the order.”

6. Adverting to the scope of the expression “subject of an appeal” occurring in S. 34(2) of the Madras Act the Supreme Court affirming the decision of the Madras High Court in Erode Yarn Stores v. State of Madras (1963) 14 STC 724 said that before the jurisdiction of the Board of Revenue to exercise its powers under S. 34(2)(b) of the Madras General Sales Tax Act, 1959 can be held to be taken away, the appeal filed before the Appellate Tribunal must have been an effective appeal and that an appeal which was dismissed by the Tribunal on the ground of limitation was not an effective appeal, and held that the expression “subject of an appeal” in S. 34(2)(b) meant “subject of an effective appeal”. In the result, the Supreme Court held that in a case where an appeal is time-barred, there is no effective disposal of the appeal and hence the Board of Revenue has jurisdiction to revise the order which has been made subject to the appeal to the Appellate Tribunal.

7. The next decision on which reliance was placed by the learned counsel for the petitioner is the one reported in (1978) 113 ITR 363 (Chiranjilal Daga v. Commr. of Income-tax, Tamil Nadu v. Madras) wherein the assessee's appeal to the Appellate Assistant Commissioner was dismissed as time-barred and on appeal to the Tribunal the assessce raised grounds relating to merits also. The Tribunal, without dealing with the merits, dismissed the appeal as time barred and confirmed the order of the Appellate Asst. Commissioner dismissing the appeal as time-barred. On revision to the Commissioner it was held that the filing of an ineffective or incompetent appeal before the Appellate Asst. Commissioner or the Tribunal did not deprive an assessee of the right of revision under S. 264 of the Income Tax Act, 1961. It was also held that even though the petitioner had questioned the assessment in the grounds of appeal before the Tribunal, the order of the Tribunal related only to the question of delay and cannot be treated as one on merits and covering the entire gamut of the appeal. Accordingly it was held that the revision petition before the Commissioner was maintainable.

8. Viewed in the above perspective, I have no hesitation in holding that there is no effective disposal of the petitioner's appeal either by the Commissioner of Income Tax (Appeals) or by the Income Tax Appellate Tribunal. In Ext. P2 the Commissioner of Income Tax (Appeals) refused to entertain the appeal filed by the petitioner on the ground the petitioner failed to pay the admitted tax and the said decision was confirmed by Ext. P3 order of the Appellate Tribunal; so much so there is no effective disposal of the petitioner's appeal and consequently the first respondent has jurisdiction to raise the order which has been made the subject of appeal before the Appellate Tribunal.

9. No doubt, learned counsel for the Revenue, placed strong reliance on the decision reported in Commr. of Wealth Tax, Bombay v. Mrs. Ksturbai Walchand ((1989) 177 ITR 188), a case under the Wealth Tax Act. However, having regard to the interpretation placed by the Supreme Court on the expression ‘subject of an appeal’ in Board of Revenue, Madras v. Raj Brothers Agencies ((1973) 31 STC 434) and the latter decision of the Madras High Court in Chiranjilal Daga v. CIT ((1978) 113 ITR 363) construing the very same expression ‘subject of an appeal’ occurring in S. 264 of the Income Tax Act as subject of effective appeal, I am of the view that the matter stands squarely concluded by the above decisions in favour of the pctitioner-assessee and against the Revenue.

10. I therefore allow this Original Petition and quash Exts. P1 and P4 orders passed by the respondents. The findings of the first respondent that “the revision petition filed by the assessee is incompetent and cannot be entertained” vide para. 4 of Ext. P4 order is set aside and the first respondent is directed to take the revision on file and dispose of the same afresh in accordance with law. There will be no order as to costs.

11. Allowed.