B.C. MITRA, A.M. assessee firm derives income from contract business. In respect of asst. yr. 1976-77, firm's assessment was completed on total income of Rs.1,05,310 as against income shown of Rs. 1,02,114. CIT Ranchi on scrutiny of records found that there was discrepancy of Rs. 22,000 in value of closing stock of materials as shown in trading account and balance sheet drawn up for year ending 5th Feb., 1976. He, accordingly, initiated proceedings under s. 263 of Act. During course of hearing before CIT, assessee's ld. Counsel, Shri A.K. Moitra, admitted that he was not able to reconcile discrepancy as pointed out in CIT's show cause notice under s. 263 of Act. CIT was, accordingly of opinion that ITO's order of assessment in respect of asst. yr. 1976-77 was erroneous in so far as it was prejudicial to interest of Revenue. CIT held in his order under s. 263 that "the assessee has taken credit of Rs. 87,000 on account of opening stock in subsequent assessment year. value of closing stock as shown in trading account at Rs. 65,000, therefore appears to be patently incorrect". He, accordingly, set aside assessment and directed ITO to reframe same after ascertaining as to "how did assessee manage to tally balance sheet." Against said order of CIT dt. 11th Aug., 1980, assessee had filed present appeal. ld. counsel's objection is mainly two fold, viz., (i) assessment having been merged with CIT(A) 's order, Commissioner had no jurisdiction to exercise his powers in terms of s. 263 of Act and (ii) that even though, according to CIT, ITO's order was erroneous, there was nothing to show that same was prejudicial to interest of Revenue. According to ld. counsel, assessee being firm of contractors, its income as computed in assessment at Rs. 1,05,089 came to about 9.73 per cent on gorss contract receipts of Rs. 10,79,909 , which should have been considered by CIT as reasonable considering profit margin disclosed by similar other contractors. Another objection raised by ld. counsel was that CIT had powers under s. 263 to enhance assessment and since he was satisfied that there was mistake in accounts furnished by assessee, he could direct ITO to reframe assessment by taking into account mistake as pointed out by CIT. CIT according to ld. counsel was not at all justified in setting aside entire assessment which resulted in great miscarriage of justice, inasmuch as in reassessment completed on basis of CIT's direction ITO made thumping assessment under s. 144 on total income of Rs. 3,02,850. ld. counsel, in this connection, filed before us paper book containing 18 pages. He also submitted that on question of merger itself, assessee was entitled to relief claimed in view of Full Bench decision of Madhya Pradesh High Court in case of CIT vs. Mandsaur Electric Supply Co. Ltd. (1982) 29 CTR (MP) 324 (FB): (1983) 140 ITR 677 (MP) (FB). In regard to action of CIT in setting aside whole of assessment order, ld. counsel relied on Delhi High Court decision in case of Addl. CIT vs. J.K. D'Costa (1981) 25 CTR (Del) 224: (1982) 133 ITR 7 (Del). In reply departmental representative pointed out that assessee disclosed net profit of Rs. 90,419 in its Profit & Loss Account for year ending 5th Feb., 1976. mistake noticed in value of closing stock shown in Profit & Loss Account and Balance Sheet came to Rs. 22,000. actual profit thus worked out to Rs. 1,12,419 (Rs. 90,419 + Rs. 22,000) which obviously was in excess of income assessed at sum of Rs. 1,05,310. It was thus evident, according to departmental representative that ITO's order was prejudicial to interest of Revenue. It has been stated that since assessee's ld. counsel admitted mistake before CIT, CIT's jurisdiction in terms of s. 263 could not be questioned. departmental representative also referred to para-4 of CIT's order, wherein CIT observed that "as desired by Shri Moitra" assessment was set aside. It could not be said, therefore that assessee was aggrieved by CIT's order and, consequently, appeal before Tribunal was incompetent. For this proposition he relied on two High Court decisions reported in Ramanal Kamdar vs. CIT 1976 CTR (Mad) and CIT vs. Ram Kumar Agarwalla & Bros. 1977 CTR (Cal) 43: (1977)108 ITR 73 (Mad) 185: (1977) 108 ITR 457 (Cal). On point of merger, departmental representative referred to Full Bench decision of Madhya Pradesh High Court reported in CIT vs. R.S. Banwarilal (1982) 28 CTR (MP) 59 (FB): (1983) 140 ITR 3 mp (FB) and another Madhya Pradesh High Court decision reported in Alok Paper industries vs. CIT (1983) 139 ITR 1064 (MP). departmental representative also referred to Gujarat High Court decision reported in Karsandas Bhagwandas Patel vs. ITO (1975) 98 ITR 255 (Guj) and to Supreme Court decision in Madurai Mills Co. Ltd. vs. State of Madras (1967) 19 STC 144 (SC). He particularly drew our attention to their Lordships observation at p. 149 of said report, wherein it has been observed as under: "But doctrine of merger is not doctrine of rigid and universal application and it cannot be said that wherever there are two orders, one by inferior Tribunal and other by superior Tribunal, passed in appeal or revision, there is fusion or merger of two orders irrespective of subject- matter of or revision order and scope of appellate or revisional contemplated by particular stature. In our opinion, application of doctrine depends on nature of appellate or revisional order in such case and scope of statutory provisions conferring appellate or revisional jurisdiction." We have considered submissions of parties concerned. It is not in dispute that mistake cropped up in figures furnished in respect of closing stock of materials in assessee's trading account and in balance sheet for year ending 5th Feb., 1976. According to assessee, mistake was not that serious which could justify CIT's exercise of powers in terms of s. 263 of Act. We are, however, not impressed with ld. counsel's contention in this regard as, in our opinion, discrepancy pointed out by CIT clearly implied that balance sheet drawn up as at end of accounting year relevant for asst. yr. 1976-77 did not reflect true state of affairs. We are, accordingly, satisfied that CIT's exercise of jurisdiction in terms of s. 263 of Act was not improper. In regard to point raised that in view of merger of ITO's order with that of CIT(A) Commissioner could not exercise his revisional pores under s. 263. We may point out that Full Bench Madhya Pradesh High Court decision relied on by departmental representative [(1982) 28 CTR (MP) 59 (FB): (1983) 140 ITR 3 (MP) (FB)] is later decision than one relied on by assessee's ld. counsel [(1983) 140 ITR 677 (MP) (FB) ]. High Court in that case held that "under s. 263 of IT Act, 1961 , Commissioner has no jurisdiction to set aside order of assessment passed by ITO when that order is subject-matter in appeal preferred by assessee before AAC." In later Full Bench decision which has been relied on by departmental representative, their Lordships observed that "where appeal has been preferred by assessee to AAC from order of assessment made by ITO in respect of only some of items covered by ITO's order and t h e remaining items, forming part of ITO's assessment order, were not agitated by either party, though it was open also to Revenue to agitate them or AAC to consider them suo moto and no decision of AAC is, therefore made in respect of remaining items, ITO's order merges with appellate order of AAC only to extent it was considered and decided by AAC but that matters which are not covered by appellate order of AAC are left untouched and to that extent ITO's assessment order survives, permitting exercise of revisional jurisdiction by Commissioner under s. 263 of IT Act, 1961. In regard to point raised by CIT justifying his action under s. 263 assessee could not have any grievance for which it could file appeal before CIT(A) and, consequently, doctrine of merger in respect of mistake pointed out by CIT was not at all applicable in instant case. ld. counsel's further objection that CIT ought to have enhanced assessment and could not, in circumstances, restore assessment on ITO's file for making de novo assessment in our opinion, is also not tenable as CIT observed in his order that 'as desired by Shri Moitra" he was setting aside assessment with direction to ITO to reframe assessment in accordance with law. aforesaid direction of CIT, in any way, cannot be considered as illegal. issue now raised that ITO did not carry out CIT's order in reframing set aside assessment , in our opinion, cannot make CIT's order invalid. assessee admittedly can avail of remedial measures as provided under Act in regard to subsequent assessment completed by ITO under s. 144 of Act. We would accordingly, uphold CIT's order and dismiss appeal of assessee. *** CHHOTANAGPUR BUILDERS v. INCOME TAX OFFICER