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PETITIONER: COMMISSIONER OF INCOME-TAX, BOMBAY

       Vs.

RESPONDENT: M/S.  AMRITLAL BHOGILAL & CO.

DATE OF JUDGMENT: 28/04/1958

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. AIYYAR, T.L. VENKATARAMA SARKAR, A.K.

CITATION:  1958 AIR  868            1959 SCR  713

ACT:        Income Tax-Registration and assessment of firm by Income Tax        Officer-Appeal   against   orders  of   assesment-Power   of        Appellate  Assistant Commissioner in appeal-Cancellation  of        order  of  registration  by Commissioner of  income  Tax  in        revision Pending such appeal-Validity-Indian Income-tax Act,        1922 (XI of 1922), Ss. 26A, 31 and 33B(1).        714

HEADNOTE: The  respondent  firm  was assessed to  income-tax  for  the assessment  years  1947-48,  1948-49 and  1949-50  under  S. 23(3).   The Income-tax Officer renewed the registration  of the  firm under S. 26A of the Income-tax Act and  passed  an order  under S. 23(6) allocating the shares of  the  various partners.   The  respondent preferred  appeals  against  the orders   of   assessment   to   the   Appellate    Assistant Commissioner.  Oil November 4, 1950, the Appellate Assistant Commissioner  partly accepted the appeals in respect of  the assessment  years  1947-48  and 1948-49 but  the  appeal  in respect  of the assessment year 1949-50 was  still  pending. Meanwhile  after issuing notice to the parties  and  hearing them  the  Commissioner, acting under s. 33B(1),  passed  an order  on June 5, 1952, cancelling the registration  granted under  S. 26A on the ground that one of the partners of  the firm  was  a minor, and directed the Income-tax  Officer  to make fresh assessments for the three years.  The  respondent preferred  appeals  to  the Appellate  Tribunal  which  were allowed.   On the application of the appellant the  Tribunal referred, under s. 66(1) of the Act, three questions to  the High  Court  of Bombay.  In regard to the  assessment  years 1947-48  and 1948-49 the High Court held that the orders  of the  Income-tax Officer granting registration had merged  in the appellate orders of the Assistant Appellate Commissioner and the revisional power of the Commissioner under S. 33B(1) could  not be exercised in respect of them.  With regard  to the  renewal of registration for the year 1949-50  the  High Court  held  that the Commissioner could  not  exercise  his revisional power as the propriety of this order was open  to consideration by the Appellate Assistant Commissioner in the respondent’s  appeal  pending  before  him.   The  appellant

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obtained special leave and appealed: Held,  that  the  Commissioner had the  authority  under  s. 33B(1)  to set aside the orders of registration made by  the Income-tax  Officer.   An order of  the  Income-tax  Officer granting   registration  was  not  appealable   before   the Appellate  Assistant Commissioner.  Such an order  could  be cancelled by the Commissioner in exercise of his  revisional powers  under s. 33B(1) ; but it could not be  cancelled  by the Appellate Assistant Commissioner even in the exercise of his appellate jurisdiction when dealing with an appeal by an assessee.  The theory that the order of a tribunal merges in the  order of the appellate authority did not apply  to  the order of registration passed by the Incometax Officer. Commissioner of Income-tax, Bombay North v. Tejaji  Farasram Kharawala, [1953] 23 I.T.R. 412, referred to. Durgabati  and Narmadabala Gupta v. Commissioner of  Income- tax, [1956] 30 I.T.R. 101, disapproved. But  the  Commissioner  has no power  while  exercising  his revisional  jurisdiction under S. 33B(1) of the Act  to  set aside  the  assessment  orders.  The  Commissioner,  in  the present case, did 715 not  really  intend to set aside the assessment  orders  but merely  to  direct the Income-tax Officer to  make  suitable consequential  amendments  in  regard to  the  machinery  or procedure.  to be adopted to recover the tax payable by  the respondent.  The registration or non-registration of a  firm does not at all affect the computation of taxable income; it merely governs the procedure to be adopted in recovering the tax found due. Shapurji  Pallonji  v. Commissioner of  Income-tax,  Bombay, [1945] 13 I.T.R. 113, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 128 of 1955. Appeal  by special leave from the judgment and  order  dated March  5, 1953, of the Bombay High Court in I. T. R. No.  40 of 1952. H.   N. Sanyal, Additional Solicitor-General of India, K.   N.  Rajagopala  Sastri  and  R.  H.  Dhebar,  for   the appellant. B. R. L. Aiyangar, for the respondent. 1958.  April 28.  The Judgment of the Court was delivered by GAJENDRAGADKAR  J.-This is an appeal by the Commissioner  of Income-tax,  Bombay, by special leave and it raises a  short question  of  law under s. 33B of the Income-tax  Act.   The respondent  assessee had been registered as a firm under  s. 26A  of  the Act for the year 1946-47.  For  the  assessment years  1947-48, 1948-49 and 1949-50, the Income-tax  Officer made the assessment on the respondent on June 7, 1949,  June 7, 1949, and September 23, 1949, respectively under s. 23(3) of  the Act.  The Income-tax Officer made an estimate  about the profits of the respondent under the proviso to s. 13 and computed  the total income of the respondent at Rs.  95,053, Rs.  93,430 and Rs. 83,752 for the said years  respectively. The  respondent  had  applied for and  obtained  renewal  of registration  of the firm.  The Income-tax Officer had  also passed an order under s. 23(6) of the Act and allocated  the shares of the various parties. Against the said assessment orders the respondent  preferred an  appeal  to  the Appellate  Assistant  Commissioner.   On November 4, 1950, the Appellate 91

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716 Assistant  Commissioner reduced the  respondent’s  estimated profit  by Rs. 28,250 in the assessment year 1947-48 and  by Rs. 19,000 in the assessment year 1948-49.  The respondent’s appeal in regard to the assessment year 1949-50 was  pending before the Appellate Assistant Commissioner. Meanwhile  it had come to the notice of the Commissioner  of Income-tax  that the respondent firm which had been  granted renewal of registration by the Income-tax Officer was not  a firm  which could be registered under the Act as one of  the partners  of  the firm was a minor.  The  Commissioner  then took action under s. 33B(1) of the Act and issued notice  to the respondent to show cause why the assessments made  under s.  23(3) of the Act and the registration granted  under  s. 26A should not be cancelled.  After hearing the parties, the Commissioner passed an order under s. 33B(1) on June 5, 1951 by which he cancelled the registration of the firm under  s. 26A  and  directed  the Income-tax  Officer  to  make  fresh assessments  against the respondent as an unregistered  firm for  all  the three years.  As a result of  this  revisional order passed by the Commissioner of Income-tax, the  Income- tax Officer passed fresh orders. The  respondent preferred five appeals to the tribunal;  two of  these  were against the orders passed by  the  Appellate Assistant  Commissioner  under  s. 31  and  related  to  the assessment  years  1947-48 and 194849; while  the  remaining three  challenged the orders passed by the  Commissioner  of Income-tax  under  s. 33B(1) of the Act and related  to  the assessment  years  1947-48, 1948-49 and 1949-50.   In  these three  appeals, with which we are concerned, the  respondent had urged that the Commissioner was not competent in law  to pass  an  order setting aside an assessment which  had  been confirmed   or   modified   by   the   Appellate   Assistant Commissioner;  that  the orders passed by  the  Commissioner under s. 33B(1) were bad in law as they directed the Income- tax Officer to pass an order in a particular manner and that the  orders passed by the Income-tax Officer  subsequent  to the  cancellation of the respondent’s registration were  bad in law as they were passed with- 717 out  giving  notice  to, or  hearing,  the  respondent.   On January 2, 1952, the tribunal upheld the contentions  raised by the respondent and allowed the appeals. The appellant then moved the tribunal under s. 66(1) of  the Act for referring the questions specified in its application for the opinion of the High Court.  The tribunal accordingly framed  the following three questions and referred  them  to the High Court of, Bombay: " 1. Whether on the facts and circumstances of the case  the Commissioner  of Income-tax acting under s. 33B(1)  can  set aside   the  orders  passed  by  the   Appellate   Assistant Commissioner, for the assessment years 1947-48 and 1948-49 ? 2.Whether  on  the facts and circumstances of the  case  the order  passed  by the Commissioner of Income-tax  dated  5th June,  1951,  is  bad in law as it  directs  the  Income-tax Officer to pass an order in a particular manner ? 3.Whether on the facts and circumstances of the case  orders passed  by the Income-tax Officer dated 21-6-52 are  bad  in law,  as fresh notices as required by Sections 22 and 23  of the Income-tax Act were not given by the Income-tax  Officer to the assessee ? " This  matter was heard by the High Court on March  5,  1953. In regard to the assessments made for the years 1947-48  and 1948-49 the High Court held that the question raised by  the appellant was concluded by the judgment already delivered by

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it in the Commissioner of Income-Tax, Bombay North v. Tejaji Farasram Kharawala (1).  In Tejaji’s case the High Court had held that when an appeal is provided from a decision of  the tribunal  and  the appeal court, after hearing  the  appeal, passes  an order, the order of the original court ceases  to exist  and is merged in the order of the appeal  court;  and although  the appeal court may merely confirm the  order  of the  trial court, the order that stands and is operative  is not the order of the trial court but the order of the appeal court.   In  that view of the matter, since  the  Income-tax Officer’s order (1)  [1953] 23 I.T.R. 412. 718 granting registration to the respondent was assumed to  have merged  in the appellate order, the revisional power of  the Commissioner  could not be exercised in respect of it.   The same  view  has been taken in the majority decision  of  the Patna  High  Court  in Durgabati and  Narmadabala  Gupta  v. Commissioner  of Income-tax (1).  In respect of the  Income- tax Officer’s order renewing registration to the  respondent for the year 1949-50, the High Court took the view that  the revisional power of the Commissioner could not be  exercised even  in respect of this order because the propriety or  the correctness  of this order was open to consideration by  the Appellate Assistant Commissioner in the respondent’s  appeal then  pending  before  him, Commissioner  of  Income-tax  v. Amritlal  Bhogilal (subnom) (2).  In respect of  this  order the High Court had framed an additional question.  It was in these terms: " Whether the order of the Commissioner  acting under  s. 33B(1) setting aside the order of  the  Income-tax Officer  where  an  appeal against that  order  was  pending before  the Appellate Assistant Commissioner was  valid?   " The  High  Court answered this additional question  also  in favour  of the assessee.  In the result the High Court  held that  the Commissioner’s order cancelling  the  respondent’s registration  for  all  the  three  years  in  question  was invalid.   That  is  why the High Court  did  not  think  it necesssary  to answer the remaining two questions framed  by the tribunal. The  application subsequently made by the appellant  to  the High  Court for a certificate under s. 66A (2) was  rejected by the High Court.  Thereupon the appellant applied for  and obtained  special leave from this Court on March  22,  1954. The  appellant’s  contention is that the view taken  by  the High  Court  that the Commissioner of Income-tax  could  not have  exercised  his  revisional power  in  respect  of  the Income-tax  Officer’s  order granting  registration  to  the respondent with regard to all the three years in question is based  on  a misconstruction of the relevant  provisions  of s.33B of the Act. Section 33B (1) which confers revisional power on (1) [1956] 30 I.T.R, 101. (2) [1953] 23 I.T.R. 420. 719 the Commissioner provides that the Commissioner may call for and  examine the record of any proceeding under the Act  and if he considers that any order passed therein by the Income- tax  Officer is erroneous in so far as it is prejudicial  to the  interests  of  the revenue, he may,  after  giving  the assessee an opportunity of being heard and, after making and causing to be made such enquiry as he deems necessary,  pass such order thereon as the circumstances of the case  justify including an order enhancing or modifying the assessment  or cancelling  the assessment or directing a fresh  assessment. Sub-section  (2) provides that orders of re-assessment  made

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under s. 34 cannot be revised under s. 33B (1) and adds that the  said  revisional power cannot be  exercised  after  the lapse  of two years from the date of the order sought to  be revised.   Sub-section (3) gives the assessee the  right  to prefer an appeal to the appellate tribunal against the  Com- missioner’s  revisional order within the prescribed  period; and sub-s. (4) provides for the procedure for filing such an appeal. In the present appeal two short questions fall to be decided under  s. 33B (1).  Does the order passed by the  Income-tax Officer granting registration to the assessee firm  continue to  be an order passed by the Income-tax Officer even  after the  assessee’s  appeal against the assessment made  by  the Income-tax  Officer  on the basis that the  assessee  was  a registered  firm  has  been disposed  of  by  the  Appellate Assistant  Commissioner ? In other words, where  the  appeal preferred  by  an assessee against his assessment  has  been considered   and   decided  by   the   Appellate   Assistant Commissioner, does the order of registration along with  the subsequent order -of assessment merge in the appellate order ? If, in law, the order of registration can be said to merge in   the   final   appellate   order,   then   clearly   the Commissioner’s  revisional  power  cannot  be  exercised  in respect  of  it.   This question arises in  respect  of  the registration  order  in regard to the two  assessment  years 1947-48 and 1948-49.  The other question which also falls to be  decided is whether the order of registration in  respect of the assessment year 720 1949-50  can be made the subject-matter of the  exercise  of the   Commissioner’s  revisional  power  even   though   the assessee’s  appeal against the assessment for the said  year is  pending before the Appellate Assistant  Commissioner  at the material time. 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 affirmance 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. In dealing with this question it would be necessary first to refer to the relevant provisions of the Act in regard to the granting of registration.  Section 26A of the Act lays  down the procedure for the registration of firms.  An application has  to  be made by the firm in that behalf  specifying  the particulars  prescribed  by  the said  section  and  by  the material  rules  framed under the Act.  If  registration  is granted by the Income-tax Officer it enables the  Income-tax Officer  to adopt the procedure prescribed by s. 23 (5)  (a) for  making assessment orders in respect of  the  registered firm.  If a firm is not registered the Income-tax Officer is required to follow the procedure prescribed by s. 23 (5) (b) in  making  assessment  orders in  respect  of  unregistered firms.   A firm is an assessee under s. 2 (2) whether it  is registered under s. 26A or not.  The Act does not impose  an obligation  on firms to apply for and  obtain  registration.

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The  Act in terms does not purport to define the  effect  of registration nor does it enumerate the rights of parties  on registration  of firms.  Section 23 (5) (a) and (b)  provide for, the machinery for 721 collecting or recovering the tax and in no sense can they be treated  as  charging sections.  Broadly stated, even  if  a firm is registered in pursuance of an application made under s. 26A, no difference arises in the liability of the firm or its individual partners to be taxed for the total income  as may be determined by the Income-tax Officer under ss. 3  and 4  of the Act.  The computation of taxable income is not  at all  affected by the machinery provided by s. 23  (5).   The decision in Shapurji Pallonji v. Commissioner of Income-Tax, Bombay  (1)  on which Mr. Ayyangar  himself  relied  clearly brings  out and emphasizes this position.  It is  true  that the  Income-tax  Officer  is empowered  to  follow  the  two methods  specified in s. 23 (5) (a) and (b)  in  determining the  tax  payable  by  registered  and  unregistered   firms respectively and making the demand for the tax so found due; but this does not affect the computation of taxable  income. It  is  important to bear in mind that  the  order  granting registration  to  an  assessee firm is  an  independent  and separate  order  and  it  merely  affects  or  governs   the procedure to be adopted in collecting or recovering the  tax found due.  It is not disputed that the registration granted by  the  Income-tax  Officer  to an  assessee  firm  can  be cancelled by him either under s. 23 (4) or under r. 6B.   It is  also clear that the Income-tax Officer’s order  granting registration  can be cancelled by the Commissioner under  s. 33B (1).  The argument for the respondent, however, is that, as  a result of the decision of the appeal preferred by  him against  the Income-tax Officer’s order of  assessment,  the order  of registration passed by the Income-tax  Officer  in favour  of the respondent has ceased to be the order  passed by the Income-tax Officer as such. It  is therefore necessary to inquire whether the  order  of registration  passed  by  the  Income-tax  Officer  can   be challenged by the department before the Appellate  Assistant Commissioner where the assessee firm has preferred an appeal against  the  order  of assessment.  The  decision  of  this question would obviously depend upon the relevant provisions of the (1)[1945] 13 1. T. R. 113 722 Act  in  respect  of  appeals  to  the  Appellate  Assistant Commissioner  and  the  powers of  the  Appellate  Assistant Commissioner.   Section 30 (1) gives the assessee the  right to  prefer appeals against the orders specified in the  said section.  The assessee firm can, for instance, object to the amount of income assessed under s. 23 or s. 27. The assessee firm  can also object to the order passed by the  Income-tax Officer  refusing to register it under s. 23 (4) or s.  26A. It can likewise object to the cancellation by the Income-tax Officer  of  its  registration  under  s.  23  (4).   It  is significant  that,  whereas an appeal  is  provided  against orders  passed by the Income-tax Officer under s. 23 (4)  or s.  26A either refusing to register the firm  or  cancelling registration  of  the firm, no appeal can be  filed  by  the department against the order granting registration.   Indeed it  is  patent  that the scheme of the  Act  in  respect  of appeals  to the Appellate Assistant Commissioner is that  it is only the assessee who is given a right to make an  appeal and not the department.  Thus there can be no doubt that the Income-tax  Officer’s order granting registration to a  firm

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cannot  become  the subjectmatter of an  appeal  before  the Appellate Assistant Commissioner. The  next question which must be considered is  whether  the Income-tax  Officer’s order granting registration to a  firm can  be challenged by the department during the  hearing  of the firm’s appeal against the final order of assessment made by  the  Income-tax Officer ? The powers  of  the  Appellate Assistant Commissioner are to be found in s. 31 of the  Act. Section  31  (3)  (a)  authorises  the  Appellate  Assistant Commissioner  to  confirm,  reduce,  enhance  or  annul  the assessment  under appeal.  Under s. 31 (3) (b), wide  powers are  given  to  the appellate authority  to  set  aside  the assessment  or direct the Income-tax Officer to  make  fresh assessment after making such further enquiry as the  Income- tax  Officer  may think fit or as  the  Appellate  Assistant Commissioner   may   direct.    The   Appellate    Assistant Commissioner is also given the authority, in the case of  an order  cancelling the registration of the firm under  sub-s. (4) of s. 23 or 723 refusing to register a firm under sub-s. (4) of s. 23 or  s. 26A  or to make a fresh assessment under s. 27,  to  confirm such order or cancel it and direct the Incometax Officer  to register the firm or to make a fresh assessment as the  case may  be.   This  section  further lays  down  that,  at  the hearing,  of  an appeal against the order of  an  Income-tax Officer,  the Income-tax Officer shall have the right to  be heard either in person or by his representative.  It is thus clear that wide powers have been conferred on the  Appellate Assistant Commissioner under s. 31.  It is also clear  that, before  the appellate authority exercises his powers, he  is bound  to  hear  the Income-tax Officer  or  his  represent. ative.   It  has been urged before us by Mr.  Ayyangar  that these  provisions  indicate that, in exercise  of  his  wide powers the Appellate Assistant Commissioner can, in a proper case,   after   hearing  the  Income-tax  Officer   or   his representative,  set aside the order of registration  passed by  the Income-tax Officer.  We are not -prepared to  accept this  argument.   The  powers  of  the  Appellate  Assistant Commissioner, however wide, have, we think, to be  exercised in  respect  of  the matters  which  are  specifically  made appealable under s. 30(1) of the Act.  If any order has been deliberately left out from the jurisdiction of the Appellate Assistant Commissioner it would not be open to the appellate authority  to  entertain  a  plea,  about  the  correctness, propriety  or  validity of such an order.   Indeed,  if  the respondent’s contention is accepted, it would virtually give the  department  a  right of appeal  against  the  order  in question  and there can be no doubt that the scheme  of  the Act  is not to give the department a right of appeal to  the Appellate  Assistant Commissioner against any orders  passed by the Income-tax Officer.  The order granting  registration can  be cancelled by the Income-tax Officer  himself  either under  r. 6B or under s. 23(4).  It may be cancelled by  the Commissioner in exercise of his revisional power under s. 33 B;  but  it cannot be cancelled by the  Appellate  Assistant Commissioner in exercise of his appellate jurisdiction under s. 31 of the Act.  It is true that, 92 724 in  dealing with the assessee’s appeal against the order  of assessment, the Appellate Assistant Commissioner may  modify the  assessment,  reverse  it or send it  back  for  further enquiry  ;  but  any  order  that  the  Appellate  Assistant Commissioner  may  make  in respect of any  of  the  matters

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brought before him in appeal will not and cannot affect  the order  of registration made by the Income-tax  Officer.   If that be the true position, the order of registration  passed by the Income-tax Officer stands outside the jurisdiction of the  Appellate Assistant Commissioner and does not  strictly form part of the proceedings before the appellate authority. Even  after  the appeal is decided and  in  consequence  the appellate  order  is  the  only order  which  is  valid  and enforceable  in law, what merges in the appellate  order  is the  Income-tax  Officer’s order under appeal  and  not  his order  of registration which was not and could never  become the  subject-matter  of  an  appeal  before  the   appellate authority.  The theory that the order of the tribunal merges in  the  order of the appellate authority  cannot  therefore apply to the order of registration passed by the  Income-tax Officer in the present case. In  this connection we may refer to the argument  which  Mr. Ayyangar  seriously pressed before us.  He  contended  that, when   the  Appellate  Assistant  Commissioner   hears   the assessee’s appeal, he is himself computing the total taxable income of the assessee and, in discharging his obligation in that behalf, he may be entitled to consider all relevant and incidental  questions.   In  support of  this  argument  Mr. Ayyangar  referred us to the decision in Rex v. The  Special Commissioner  of  Income-Tax (ex parte Elmhirst)  (1).   The point  which arose before the King’s Bench Division in  this case was whether, when a notice of appeal has been given, it was  open  to the assessee to withdraw his  appeal  and  the Court held that once notice of appeal is given the appellate authority  was entitled and indeed bound to see that a  true assessment  of  the amount of the taxpayer’s  liability  was arrived  at.   We are unable to see how  this  decision  can really help the (1)  [1935] 20 Tax Cas. 381. 725 respondent  in  the present case.  When an appeal  is  taken before  the Appellate Assistant Commissioner undoubtedly  he is  bound to examine the case afresh but that  cannot  bring within  the  purview of his appellate  jurisdiction  matters which  are  deliberately left out by the Act.  If  s.  30(1) does  not provide for an appeal against a particular  order, legislature  obviously intends that the correctness  of  the said   order  cannot  be  impeached  before  the   appellate authority.   The  jurisdiction and powers of  the  appellate authority must inevitably be determined by the specific  and relevant provisions of the Act. In this connection it may be useful to compare the  relevant and material features of the revisional -powers conferred on the  Commissioner  by  ss. 33A and  33B  respectively.   The Commissioner’s  revisional  power  under s.  33A  cannot  be exercised to the prejudice of the assessee in any case.   It can  be  exercised  in  respect  of  orders  passed  by  any authority  subordinate to the Commissioner; but in  no  case can the revisional order prejudicially affect the  assessee. It  is significant that the explanation to s. 33A  expressly provides that the Appellate Assistant Commissioner shall  be deemed  to be an authority subordinate to the  Commissioner. In  other  words, in exercise of this revisional  power  the Commissioner may modify or reverse in favour of the assessee even   the   orders  passed  by  the   Appellate   Assistant Commissioner.   The  position  Under  s.  33B,  however,  is different.  The Commissioner’s revisional power under s. 33B can  be  exercised only in respect of orders passed  by  the Income-tax  Officer.  The appellate orders are  outside  the purview  of  s.  33B.  That  is  one  important  distinction

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between  the  two revisional powers.   The  other  important distinction  is  that, whereas under s. 33A  the  revisional jurisdiction  cannot  be exercised to the prejudice  of  the assessee, under s. 33B the Commissioner can, in exercise  of his  revisional power, make orders to the prejudice  of  the assessee.   It is not disputed that under s.  33B  erroneous orders   passed   by  the  Income-tax  Officer   which   are prejudicial   to   the  revenue  can  be  revised   by   the Commissioner.  Now, 726 the  Income-tax Officer’s order registering the firm is  not appealable  and so it cannot become the subjectmatter of  an appeal before the Appellate Assistant Commissioner.  Such an order can therefore be revised by the Commissioner under  s. 33B  whenever  he  considers that it  has  been  erroneously passed.   In  the present case there is no doubt  that  the, respondent firm cannot be validly registered in view of  the fact  that  one of its partners is a minor and  so,  on  the merits, the Commissioner’s order is clearly right.  We  must accordingly hold that the High Court was in error in  taking the view that the Commissioner had no authority to set aside the  registration  order passed by  the  Income-tax  Officer granting registration to the respondent for the years  1947- 48 and 1948-49. The  case in regard to the subsequent year 1949-50  presents no  difficulty.   The  appeal preferred  by  the  respondent against the Income-tax Officer’s assessment order in respect of  this  year was pending at the material time  before  the Appellate  Assistant  Commissioner; and so  no  question  of merger  arose  in respect of the order granting  renewal  of registration  for this period.  There can be no  doubt  that even  on the theory of merger the pendency of an appeal  may put the order under appeal in jeopardy but until the  appeal is  finally  disposed  of the said  order  subsists  and  is effective in law.  It cannot be urged that the mere pendency of  an appeal has the effect of suspending the operation  of the order under appeal.  The High Court, however, appears to have  taken  the  view  that  the  revisional  power  is  an extraordinary  power and can be exercised only  for  unusual and extraordinary reasons.  It was also assumed by the  High Court that, in the pending appeal, the department would have an alternative remedy because, according to the High  Court, the  department  could have challenged the validity  or  the propriety  of the respondent’s registration and  could  have asked the Appellate Assistant Commissioner to cancel it.  As we  have  already  pointed out,  the  department  could  not challenge  the  validity of the registration  order  in  the assessee’s appeal before the appellate authority and so  the argument that the. 727 department had an alternative remedy is not correct.  It  is clear  from  the judgment of the High Court that it  is  the assumption  that  the department had an  alternative  remedy which  weighed  with the learned judges  in  reaching  their final conclusion.  Then the argument that the  extraordinary revisional  power must be exercised only  for  extraordinary reasons  is  really not very material.  Whether or  not  the revisional  power can be exercised in a given case  must  be determined  solely  by  reference to the  terms  of  s.  33B itself.    Courts  would  not  be  justified   in   imposing additional limitations on the exercise of the said power  on hypothetical  considerations of policy or the  extraordinary nature of the power.  We must, therefore, hold that the High Court was also in error in holding that the Commissioner was not  authorised in cancelling the order of the  respondent’s

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registration  for the year 1949-50.  The result is that  the view taken by the High Court must be reversed and the  first question  framed by the tribunal as well as  the  additional question framed by the High Court must be answered in favour of the appellant. Then  there remain two other questions which were framed  by the tribunal but have not been considered by the High Court. The  learned  counsel appearing for both the  parties  agree that we need not remit these two questions to the High Court with the direction that the High Court should deal with them in accordance with law; it has been conceded before us that, if  the  principal question about the  Commissioner’s  power under  s. 33B(1) to cancel the respondent’s registration  is answered in favour of the appellant, then the two  remaining questions  would become academic and answers to  them  would also have to be in favour of the appellant.  It is true,  by his  order  the  Commissioner purported  to  set  aside  the assessment orders made under s. 23(3) and s. 55 and directed the Incometax Officer to make fresh assessments according to law for each of the years in question.  If this part of  the order is literally construed it would clearly be open to the objection  raised by the respondent.  The assessment  orders passed  by the Income-tax Officer for the years 1947-48  and 1948-49 had been modified by the 728 Appellate Assistant Commissioner and in that sense they  had ceased to be the orders of assessment passed by the  Income- tax  Officer himself and so the Commissioner could not  have exercised his revisional power under s. 33B(1) in respect of the said appellate orders but we are inclined to think  that the Commissioner did not intend to set aside the assessments in  this sense.  It is clear from the order read as a  whole that,  having  cancelled the respondents  registration,  the Commissioner wanted to direct the Income-tax Officer to make suitable consequential amendment in regard to the  machinery or procedure to be adopted to recover the tax payable by the respondent.  In fact it is conceded that, in his  subsequent order, the Income-tax Officer has accepted the figure of the taxable  income  of  the respondent  as  determined  by  the appellate authority for the relevant years and has proceeded to act under s. 23(5)(b) on the basis that the respondent is an  unregistered  firm.  Therefore we cannot hold  that  the order passed by the Commissioner is bad in law on the ground that " he directed the Income-tax Officer to pass the  order in a particular manner ". The answer to question No. 2 would accordingly  be in the. negative.  Then as regards  question No.  3, it is difficult to understand how this question  can be  said to arise from the proceedings before the  tribunal. This  question  challenges  the validity  of  the  procedure adopted  by the Income-tax Officer in passing  fresh  orders against   the  respondent.   This  proceeding   is   clearly subsequent  to the impugned order of the Commissioner  under s.  33B(1)  and  so we are unable to see  how  the  tribunal allowed  the respondent to raise this contention in  appeals which   had  been  filed  by  the  respondent  against   the Commissioner’s order under s. 33B(1).  Besides, it has  been fairly  conceded  by Mr. Ayyangar before us that,  when  the Income-tax  Officer  merely proceeded to adopt  a  different machinery  to  recover the tax due from  the  respondent  in consequence   of  the  cancellation  of   the   respondent’s registration, there was no occasion or need to issue another notice  against the respondent.  We must accordingly  answer question No. 3 also in the negative. 729 In  the  result all the questions framed in  this  case  are

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answered  in favour of the appellant.  The order  passed  by the  High Court is set aside and the appeal is allowed  with costs throughout. Appeal allowed.