The doctrine of merger of orders is not a doctrine of rigid and universal application and it cannot be said that wherever there are two orders, one by the inferior Tribunal and the other by a superior Tribunal, passed in an appeal or revision, there is a fusion or merger of the two orders irrespective of the subject-matter of the appellate or revisional order and the scope of the appeal or revision contemplated by the particular statute.

K.N. Seth, J.

1. The assessee is a limited company engaged in the manufacture and sale of sugar machinery. The original assessment for the assessment year 1964-65 was completed on March 29, 1965. The assessment for the assessment year 1965-66 was made on February 24, 1966. For the assessment year 1964-65, reassessment proceeding was initiated under Section 147 of the I.T. Act and completed on December 3, 1968. For the assessment year 1965-66 the Commissioner of Income-tax by his order dated August 23, 1968, passed under Section 264 of the Act allowed a deduction of Rs. 4,800, being income-tax fees paid to M/s. P. L. Tandon and Co. Thereafter, these two assessments were rectified on April 30, 1970, and 17th October, 1968. On 30th December, 1970, the assessee made an application to the ITO under Section 154 claiming relief under Section 80-I on the ground that the assessee manufactured sugar machinery which comes under the head " Priority industry ''. The ITO rejected the claim on the ground that the applications .were barred by limitation provided under Sub-section (7) of Section 154. The AAC rejected the appeals of the assessee on the reasoning that the mistake was committed in the original assessment order dated March 29, 1965, and 24th February, 1966, for the assessment years 1964-65 and 1965-66 respectively and the applications under Section 154 moved on December 30, 1970, were clearly time-barred. The Income-tax Appellate Tribunal took the view that the time limit prescribed under Section 154(7) for the assessment year 1964-65 would start from December 3, 1968, when the order of reassessment was passed and the application made by the assessee on December 30, 1970, was in time. As regards the assessment year 1965-66 the Tribunal took the view that the revisional order of the Commissioner dated August 23, 1968, by which he allowed a deduction of Rs. 4,800, amended the order of the ITO only to the extent of the deduction allowed and to that limited extent the order of the ITO merged with the order of the Commissioner and the rest of the order of the ITO stood as it was on February 24, 1966, when the assessment order was passed by the ITO. Since the entire order of the ITO did not merge with the order of the Commissioner passed on August 23, 1968, limitation for the application under Section 154 should be computed from the date of the original assessment order and not. from the date of the order of the Commissioner and consequently the claim for the assessment year 1965-66 was barred by time. On the applications of the assessee and the Department under Section 256(1) of the Act, the Tribunal has referred the following question for the opinion of this court:

"Whether, on the facts and in the circumstances of the case, the assessee's applications under Section 154 of the Act for the assessment year 1964-65 and 1965-66 were in time ?"

2. As noted earlier, the original assessment for the assessment year 1964-65 was made on March 29, 1965. Thereafter, proceeding for reassessment was initiated and the order of reassessment was passed on December 3, 1968. The assessment was rectified on April 30, 1970. The application for seeking the relief under Section 80-I was made on December 30, 1970. Even if the order dated. April 30, 1970, is ignored, the effect. of the order of reassessment was that the earlier assessment was wiped out. The effect of reassessment proceedings came up for consideration before the Supreme Court in V. Jaganmohan Rao v. CIT [1970] 75 ITR 373. The Supreme Court observed (p. 380):

" ......once proceedings under Section 34 are taken to be validly initiated with regard to two-thirds share of the income, the jurisdiction of the Income-tax Officer cannot be confined only to that portion of the income. Section 34 in terms states that once the Income-tax Officer decides to reopen the assessment he could do so within the period prescribed by serving on the person liable to pay tax a notice containing all or any of th