Varghese Kalliath, J.
1. The question of law referred for the decision of this court reads as follows :
'Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that the Income-tax Officer had no power or jurisdiction to rectify the reassessment orders ?'
2. The question has been referred at the instance of the Revenue.
3. The assessments in question relate to the assessment years 1958-59, 1959-60 and 1961-62. The assessments were made under the Indian Income-tax Act, 1922 (hereinafter referred to as 'the Act'). The status of the assessee is a Hindu undivided family. The assessments were subsequently reopened under Section 147(a) on February 28, 1977. For each of the three assessment years, the Income-tax Officer added a sum of Rs. 80,000 as concealed income. On appeal by the assessee, the Appellate Assistant Commissioner, by his order dated April 29, 1978, reduced the additions to Rs. 55,700, Rs. 55,100 and Rs. 50.800, respectively. A further appeal before the Tribunal resulted in a further reduction and the addition was fixed at Rs. 41,767, Rs. 41,198 and Rs. 34,969, respectively.
4. In the assessments, the Income-tax Officer omitted to charge supertax that had to be levied under the provisions of the Act. While giving effect to the appellate orders, the Income-tax Officer, after issuing notices under Section 154 of the Act, rectified the assessments by levying supertax by his order dated November 9, 1978. The Income-tax Officer rejected the assessee's contention that the Income-tax Officer had no jurisdiction to rectify the assessment orders which have merged with the appellate orders.
5. The assessee filed an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner, after considering the point raised, agreed with the Income-tax Officer in holding that the merger of the assessment orders with the appellate orders will be confined to items raised in the appeals and decided by the Appellate Assistant Commissioner and not in regard to the issues which were not agitated in the appeals.Holding so, the rectification under Section 154 of the Act made by the Income-tax Officer was confirmed.
6. The assessee filed appeals before the Tribunal. The same point was pressed before the Tribunal, viz., that the Income-tax Officer had no power or jurisdiction to rectify the reassessment orders inasmuch as these orders were the subject-matter of appeals before the Appellate Assistant Commissioner. The Tribunal followed the decision of the Allahabad High Court in J.K. Synthetics Ltd. v. Addl. CIT : [1976]105ITR344(All) , and held that the Income-tax Officer's orders had merged with the Appellate Assistant Commissioner's order and so, the Income-tax Officer would not be competent to rectify the reassessment orders under Section 154(1) unless Section 154(1A) is applied. The Tribunal also found that Section 154(1A) which was introduced with effect from October 6, 1964, has no application to the case. The case of the Department that Section 154(1A) was only procedural law was rejected by the Tribunal holding that the section was a substantive provision of law which had no retrospective effect. Ultimately, the Tribunal found that the Income-tax Officer has no jurisdiction and power to rectify the reassessment orders and cancelled the same, allowing the assessee's appeals. On the above facts, the Tribunal wanted this court to decide the question of law referred to in this case.
7. Before proceeding to consider the legal contention raised by the Revenue and the assessee, we have to point out from the appellate order, the admission made by the assessee which is not controverted before us, that the assessee himself has admitted that super-tax was leviable in the assessments for the years in question. It is not disputed that the levy of super-tax did not require any long drawn process of reasoning or that it was an issue where two opinions could be held. In the background of this submission, we shall enquire into the question whether the Tribunal is correct in law when it held that the Income-tax Officer lacked jurisdiction to rectify the assessment orders under Section 154 of the Act, on account of the fact that the orders of the Income-tax Officer have merged with the appellate orders. It is difficult for us to say that this is a question which can be considered as res integra. We feel that the decisions in CIT v. Travancore Tea Estates Co. Ltd. : [1988]172ITR733(Ker) , CIT v. Ratnam Pillai : [1991]188ITR494(Ker) and CUT v. Saju Thomas : [1991]189ITR488(Ker) , have dealt with the question.
8. In CIT v. Travancore Tea Estates Co. Ltd. : [1988]172ITR733(Ker) , a Division Bench of this court, consisting of Kochu Thommen and Fathima Beevi JJ., as they then were, did not agree with J.K. Synthetics Ltd.'s case : [1976]105ITR344(All) , which has been followed by the Tribunal. After considering several decisions taking slightly different and conflicting views on the matter, this court followed the decision in Karsandas Bhagwandas Patel v. G.V. Shah : [1975]98ITR255(Guj) . In CIT v. Tejaji Farasram Kharawala : [1953]23ITR412(Bom) , Chagla C.J., speaking for the Division Bench, observed that (at page 418) : 'Once an appeal was preferred from the order of the Income-tax Officer and an order was passed in that appeal, the order of the Income-tax Officer became merged in the order of the Appellate Assistant Commissioner'. This decision was followed in CIT v. Amritlal Bhogilal and Co. 0043/1954 : [1953]23ITR420(Bom) , where it was held that even when a composite order of the Income-tax Officer dealt with the assessment and also the grant of registration to a firm and that order was the subject-matter of an appeal, which was disposed of, the entire order became merged in the order of the appellate authority. But the Supreme Court reversed Amritlal Bhogilal and Co. 0043/1954 : [1953]23ITR420(Bom) in CIT v. Amritlal Bhogilal and Co. : [1958]34ITR130(SC) . The Supreme Court observed thus (at page 738 of 172 ITR) :
'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 affirmation 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 ; but the question is whether this principle can apply to the Income-tax Officer's order granting registration to the respondent.'
9. Making the above observation, the Supreme Court held that inasmuch as the Income-tax Officer's order granting registration to the firm did not and could not form the subject-matter of the appeal, the order of the appellate authority against the composite order of the Income-tax Officer resulted in the merger of the original order only in regard to matters of assessment and not registration. There can be only a partial merger of the order on which the appellate authority has made its decision.
10. The Supreme Court after referring to CIT v. Amritlal Bhogilal and Co. : [1958]34ITR130(SC) , observed (at page 739 of 172 ITR) :
'But the doctrine of merger 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 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. In our opinion, the application of the doctrine depends on the nature of the appellate or revisional order in each case and the scope of the statutory provisions conferring the appellate or revisional jurisdiction.' .
11. From the above quote, we have to determine the extent of the application of the doctrine of merger on the basis of the appellate or revisional order in each case. Bhagwati C.J., as he then was, speaking for the Bench, observed in Karsandas Bhagwandas Patel v. G.V. Shah, ITO : [1975]98ITR255(Guj) , thus (at page 740 of 172 ITR) :
'The order of assessment made by the Income-tax Officer merges in the order of the Appellate Assistant Commissioner only in so far as it relates to items considered and decided by the Appellate Assistant Commissioner. That part of the order of assessment which relates to items not forming the subject-matter of the appellate order is left untouched and does not merge in the order of the Appellate Assistant Commissioner. If there is any mistake in this part of the order which is apparent from the record of the assessment, the Income-tax Officer can rectify such mistake because the mistake would be his own mistake which he can always correct under Section 35, Sub-section (1).' .
12. As we said earlier, the Division Bench in CIT v. Travancore Tea Estates Co. Ltd. : [1988]172ITR733(Ker) , followed the decision in Karsandas Bhagwandas Patel v. Shah (G.V.), ITO : [1975]98ITR255(Guj) . It has to be noted that Karsandas Bhagwandas Patel v. Shah (G.V.), ITO : [1975]98ITR255(Guj) , dealt with a question of rectification. It has to be noted that those items not forming the subject-matter of the appellate order remain untouched by the appellate authority and will always remain the decision of the first authority--the Income-tax Officer--and if that part is erroneous since it is an error of the Income-tax Officer, he retains the power to rectify it de hors the fact that the assessment was challenged in appeal. Of course, for rectification, the mistake or error must be apparent from the order of assessment. In this case, there is no dispute as regards the question of adding super-tax. It was omitted to be included in the assessment order.
13. The case considered by Bhagwati C.J., as he then was, in Karsandas Bhagwandas Patel v. Shah (G.V.), ITO : [1975]98ITR255(Guj) , is a plain and clear case of rectification of a mistake. Section 154 of the Act, before the amendment adding Sub-section (1A), provided for rectification of mistake thus :
'(1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in Section 116 may,--
(a) amend any order passed by it under the provisions of this Act ; ... .'
Section 154 of the Act was amended by adding Sub-section (1A) which provided that 'where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in Sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that Sub-section in relation to any matter other than the matter which has been so considered and decided'. We feel that counsel for the Revenue is justified in saying that, in the light of the earlier decisions, the amendment is only a declaration of the law as made clear by precedents of different High Courts and the Supreme Court. Counsel submitted that even without resorting to Section 154(1A), the rectification of the mistake or omission of adding super-tax can be justified under Section 154. This petition is supported by two Other decisions of this court in CIT v. Ratnam Filial : [1991]188ITR494(Ker) and CWT v. Saju Thomas : [1991]189ITR488(Ker) .
14. Counsel for the assessee, we would say, on justifiable grounds, did not challenge the correctness of the decisions in CIT v. Travancore Tea Estates Co. Ltd. : [1988]172ITR733(Ker) , CIT v. S. Ratnam Pillai : [1991]188ITR494(Ker) and CWT v. Saju Thomas : [1991]189ITR488(Ker) , but he brought to our notice the following passages from the Law and Practice of Income Tax by Kanga and Palkhivala. 'A decision on a debatable point of law or failure to apply the law to a set of facts which remain to be investigated cannot be corrected by way of rectification. If the rectification was made at a time when the issue was debatable, it cannot be supported by reference to the Supreme Court's decision settling the issue which is rendered after the rectification.' The second passage is based on the decision in Jiyajeerao Cotton Mills Ltd. v. ITO : [1981]130ITR710(Cal) and CIT v. K. Venhateswar Rao [1988] 169 ITR 330.
15. In all these cases, the question of rectification itself was debatable; whether there was a mistake or not itself was the subject-matter of thedebate. It was finally settled after the reference by the Supreme Court or other courts. The position here is totally different. In these cases, as regards the question or the issue that the Income-tax Officer has committed a mistake in not adding the super-tax, it was not a debatable issue at all. It was admitted that it was a mistake apparent from the record. That issue is not being decided in these cases, and so, the decisions reported in support of the second passage quoted above have no relevance here. Counsel wanted that the principles in those decisions have to be extended in so far as there was a conflict of views in regard to the effect, nature and extent of merger of an order of the Income-tax Officer with the appellate order, on the power of the Income-tax Officer exercisable under Section 154 of the Act. We find no justification to extend the principle stated in Jiyojeerao Cotton Mills Ltd. v. ITO : [1981]130ITR710(Cal) and CIT v. K. Venkateswar Rao : [1988]169ITR530(MP) , to a case where the mistake itself was not a debatable issue at all.
16. In the result, we hold that the Income-tax Officer in this case did not lack jurisdiction to rectify the mistake of the omission to add supertax in the assessment order, and the Appellate Tribunal was in error in holding that the assessment order totally merged in the appellate order since the issue was not decided in the appellate order.
17. The question referred to this court is answered in the negative, against the assessee and in favour of the Revenue. The reference is disposed of as above.
18. A copy of this judgment under the seal of this court and the signature of the Registrar shall be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.