The doctrine of 'merger' governs assessment proceedings, and the effect of rectification is to rectify the taxable turnover, which is part of the total turnover.

K. SHIVASHANKAR BHAT, J. - The petitioner is a dealer in fried grams. It buys grams and fries the same into fried grams. For the assessment period October 24, 1976 to November 11, 1977, there was an assessment order dated January 30, 1979. The total turnover was determined at Rs. 6,55,336 and the taxable turnover was held to be Rs. 15,000. On March 3, 1981 that order was rectified under section 25A of the Karnataka Sales Tax Act, 1957 (for short "the Act"). The turnover regarding the sales of fried gram made out of the grams purchased in the course of inter-State sales was enhanced to Rs. 1.28,178, against which there was an appeal by the petitioner. The appellate authority set aside the rectification order and remanded the matter on July 22, 1981. On August 18, 1981, the assessing authority made a fresh order on the basis of the remand order and he recomputed the turnover regarding the sales of fried grams made out of grams purchased under inter-State sales at Rs. 19,311 and levied a tax of Rs. 772. The total turnover at Rs. 6,55,336 was however maintained.

2. Thereafter, the Deputy Commissioner initiated proceedings for revising the assessment order under section 21(2) of the Act. After considering the objections of the petitioner, he made an order on November 29, 1985, by which he revised the assessment. He held that the taxable turnover ought to be Rs. 3,32.210. The petitioner approached the Appellate Tribunal in appeal without any success. Hence this revision petition.

3. Mr. Gandhi, learned counsel for the petitioner, contended that the assessment order sought to be rectified was the order dated January 30, 1979 and if so, the initiation of the proceedings was clearly barred by limitation. According to Mr. Gandhi, the turnover had two elements; one was the quantum of turnover and another was the quantum of taxable turnover. The subject of rectification, according to the learned counsel, pertain to quantum of taxable turnover and the subject of total turnover was not touched at all and therefore, to that extent the first assessment order should be taken as the real assessment order that was revised.

4. It is not possible to accept the contention of the learned counsel for the assessee. There can be no doubt that the proceedings taken for rectification of assessment of tax, were proceedings for assessment. In other words, the rectification proceedings were part of the assessment proceedings. Consequently, the effect of the rectification was to rectify the taxable turnover which was part of the total turnover. The process of rectification involved the consideration of the question as to what was the turnover of the petitioner out of which the quantum to be determined for attracting the levy.

5. The doctrine of "merger" governs the fact situation. In Commissioner of Income-tax v. Hindustan Aeronautics Ltd. [1986] 157 ITR 315, the Full Bench of this Court has observed at pages 324 and 325 as under :

"Amid this diversity of opinions, this High Court in Vijayalakshmi Lorry Service's case (see p. 327 infra) without much fuss over the matter has held that the entire order merges when the order was taken in appeal and was modified by the Appellate Assistant Commissioner. Such an order becomes final and the Commissioner was precluded from taking proceedings under section 263 of the Act to revise the order of the Income-tax Officer on another ground. That decision was rendered on September 17, 1975, and is being followed by the authorities in this State. The view taken in that decision is neither unreasonable nor erroneous. Similar view has been taken, as earlier noticed, by the High Courts of Allahabad, Calcutta, Madhya Pradesh, etc. There is, therefore, no compelling reason to review that decision. It is not proper for us to reverse that decision, merely because another view is also possible. Consistency in law should be the hallmark in the administration of justice."

The above observations of the Full Bench in respect of