By this application under s. 254(2) of IT Act, 1961 ( Act ) Department seeks rectification in order of Tribunal in IT Appeal Nos. 1383 and 1456 (Cal) of 1982 dt. 11th Oct., 1984 on ground that there has been glaring mistake in said order. In IT Appeal No. 1383 (Cal) of 1982 Department and in IT Appeal No. 1456 (Cal) of 1982 assessee challenged order of CIT (A) to extent it went against respectively each of them. At hearing of these appeals it was noticed that assessment order out of which impugned order of CIT (A) arose was set aside by CIT under s. 263 of Act and, therefore, both appeals were treated as infructuous. Now it has been pointed out by learned Departmental Representative that CIT had set aside assessment order under s. 263 only on point of allow ability of gratuity liability and on no other point whereas respective appeals of assessee and Department were filed on other points, namely, Department had objected to export market development allowance and assessee had also objected on that issue and so also on other points but none of them related to allow ability of gratuity liability. At this juncture, it is necessary to notice tenure of order of CIT under s. 263. It appears that ITO allowed claim of deduction made by assessee-company on account of gratuity liability without scrutiny of facts relating thereto. CIT found that order of ITO on that point was erroneous and prejudicial to interests of revenue. He, therefore, issued show-cause notice to assessee and in that notice no other point except allowability of gratuity liability claimed by assessee was mentioned. In entire order passed by CIT under s. 263 he considered point of gratuity liability only. At end of order he mentioned as below: "It is, however, abundantly clear that ITO while framing assessment did not consider all these facts and did not apply his mind to determination of issues germane to determination of total income and taxes thereon. It is also not clear why disallowance of sum of Rs. 21,90,191 in toto should wait till last of relevant years rather than year in which mistake has come to notice or proportionately in all relevant years. I, therefore, set aside assessment for year 1977-78 and direct ITO to make afresh assessment after examining all these issues and giving assessee proper opportunity of producing whatsoever evidence assessee choses to rely upon." CIT thus, set aside assessment order for 1977-78 and directed ITO to make fresh assessment after examining all these issues. question arises as to whether by said order CIT set aside entire assessment order for asst. yr. 1977-78. It is quite plain from words of s. 263 that CIT has jurisdiction to revise order of ITO only when it is erroneous and prejudicial to interests of revenue. CIT cannot set aside entire order of ITO unless facts and circumstances of case warrant inference that whole of order is erroneous and prejudicial to interests of Revenue. part of order is when erroneous and prejudicial to interests of Revenue; CIT has no jurisdiction to set aside whole of order. In case of Addl. CIT vs. J. K. D Costa (1981) 25 CTR (Del) 224: (1982) 133 ITR 7 Hon ble Delhi High Court observed as under: "... Though language of s. 263 is quite wide, it only empowers CIT to pass order which circumstances of case will justify. As Tribunal has rightly pointed out, mere fact that there is some minor omission or mistake in assessment order cannot justify action of CIT in setting aside whole of assessment order. Such wholesale cancellation of assessment with direction to make fresh assessment is called for only in case where there is something totally or basically wrong with assessment which is not capable of being remedied by amendments to assessment order itself ..." (p. 12) Hon ble Madras High Court in case of Hindu Bank Karur Ltd. vs. Addl. CIT 1976 CTR (Mad) 174: (1976) 103 ITR 553 held It is not any error that CIT can rectify under s. 263. His power is restricted to errors insofar as they are prejudicial to interests of Revenue. (p. 561) Hon ble High Court, therefore, did not accept contention of assessee that it could resist proceedings under s. 263 by showing that there was some other benefit in favour of Revenue which was prejudicial to assessee. words assessment is set aside and ITO is directed to make fresh assessment are generally used by appeal and revisional authorities in their orders but they should be construed in context of subject-matter of order and should not be construed to mean that assessment order as whole has been set aside. Such phrase has been considered by Hon ble High Courts in certain cases. In case of Surrendra Overseas Ltd. vs. CIT (1979) 120 ITR 872 (Cal) following order was passed by AAC: " In these circumstances, I am of opinion that all three assessments should be set aside for being redonein manner indicated above ... In making reassessments, ITO would also look into various other contentions raised in these appeals ." (p. 874) Hon ble Calcutta High Court spelled out said order to mean that t h e AAC set aside assessment only partially. Hon ble High Court observed as under: "... Read in its entirety and in its proper context order of AAC set aside assessment only partially. This is indicated in order itself. It cannot be said that it was intent of purport of said order that entire assessment in all its aspect was set aside or that ITO was left unfettered or was directed to pursue any enquiry he liked and make fresh assessment covering all items de novo." (p. 886) Similarly, in case of Katihar Jute Mills (P) Ltd. vs. CIT (1979) 120 ITR 861 (Cal) meaning of words I set aside assessment with direction to ITO to make assessment again , appearing in order of AAC where in context of subject-matter of appeal before AAC were construed as that assessment order was set aside only partially. We would like to mention word of caution that reframing of assessment in accordance with direction of CIT under s. 263 should not be taken at par with reassessment under s. 147 of Act. distinction between two is obviously made out by s. 152 of Act. In reassessment proceedings under s. 147 entire assessment should be reopened under certain circumstances but in case of reframing assessment in accordance with directions under s. 263 ITO is not at liberty to frame assessment afresh on such points not covered by s. 263 order. From plain reading of order of CIT, it is conspicuous that he directed ITO to make fresh assessment in respect of only those issues, which touched allowability of gratuity liability. order of CIT admits of no ambiguity and, therefore, no attempt should be made to oust jurisdiction of Tribunal under s. 254(2) by saying that glaring mistake in order of Tribunal can be discovered only by interpreting order of CIT by long-drawn process of reasoning or examination of arguments on points where there may conceivably be two opinions. One of us was party to order of Tribunal sought to be rectified. While passing said order it was obviously lost sight of that parties had appealed on some other points not at all touched by order of CIT under s. 263. order of Tribunal is defective on fact of it since it did not effectively deal with important issue relating to subject-matter of appeals. order of Tribunal dt. 11th Oct., 1984 is, therefore, recalled and both appeals are directed to be fixed for fresh hearing. In result, application is allowed. S. N. Rotho, A.M.: I have gone through proposed order of my learned brother. I regret that I am unable to agree with conclusion arrived at therein. At outset, I may state that decisions relied on in proposed order were concerned with different issue, viz., scope and meaning of particular order passed by CIT under s. 263 in those cases. In instant case, when appeal was heard by Tribunal on 11th Oct., 1984, scope and meaning of order under s. 263 passed by CIT in this case was not in dispute. This is apparent from short order passed by Tribunal which had proceeded on footing evidently admitted by both parties that their appeals had become infructuous because of total set aside of assessment by CIT under s. 263. In other words, both parties were not aggrieved about exact scope and meaning of order under s. 263 passed by CIT and that was not issue made out by either party before Tribunal when it heard both appeals filed by assessee as well as Department together on 11th Oct., 1984. Hence, I feel that decision cited in proposed order may not be applicable to facts of this case. On going through order under s. 263 passed by CIT, I find that he has concluded order thus: "I, therefore, set aside assessment for year 1977-78 and direct ITO to make fresh assessment after examining all these issues and giving assessee proper opportunity of producing whatsoever evidence assessee choses to rely upon." Sec. 263 states that CIT "may ... pass such order thereon as circumstances of case justify, including on order ... cancelling assessment and directing fresh assessment." language of s. 263 is quite clear. It enables CIT to cancel assessment and direct fresh assessment. order passed by him on 20th Aug., 1982 had actually done so. reason for setting aside assessment and directing fresh assessment may be any particular thing but operative part of order clearly states that assessment was set aside. In my opinion, both parties had understood order in that sense, and rightly so, when main appeal was heard by Tribunal on 11th Oct., 1984. Consequently, it is not open to Department to run round later and say that order of CIT under s. 263 was only partial set aside of assessment. This is all more inconsistent in view of fact that ITO has to make reassessment afresh which naturally gives right of appeal to assessee on all points covered in reassessment made pursuant to order under s. 263. Sec. 254 says that application for rectification can be filed by ITO in instant case, petition has been filed by senior authorised representative who is Asstt. CIT and not ITO. It is, therefore, doubtful as to whether rectification petition is at all maintainable because of this defect. Be that as it may, order dt. 11th Oct., 1984 of Tribunal clearly states that in view of subsequent development, namely, set aside of order by CIT under s. 263 directing ITO to make fresh assessment, appeal which related to earlier original assessments, became infructuous. It appears to me that there cannot be appeal against assessment order which no longer exists. There cannot be two parallel assessment orders for same assessment year. As CIT has set aside original assessment order, it ceased to exist and so, in my opinion, Tribunal rightly came to conclusion that appeals which related to said non-existent assessment order no longer had any legs to stand upon and so became infructuous. It is difficult to see any fundamental difference between he reassessments made under s. 147 and those made in pursuant to direction under s. 263 vis-a- vis powers of assessee as well as ITO in reassessment proceedings. If CIT directs under s. 263 to add back certain items or to disallow certain items then power of ITO is confined to those items. Neither ITO nor assessee can agitate any other point. However, if CIT does not do so, but sets aside assessment and directs that fresh assessment be done, then assessment as whole becomes open before I T O and, consequently, it is open to both parties to agitate all relevant matters that they could have done in course of original assessment proceedings. This is exactly what has happened in this case, and so Tribunal by its order dt. 11th Oct., 1984 has rightly held appeals against original assessment order to be infructuous. This rule of law is well settled by decision of Supreme Court in case of Manji Dana vs. CIT (1966) 60 ITR 582 (SC), of Bombay High Court in case of Deviprasad Kejriwal vs. CIT (1976) 102 ITR 180 and that of Gujarat High Court in cases of CIT vs. Maneklal Harilal Spg. & Mfg. Co. Ltd. (1977) 106 ITR 24 and CIT vs. Ahmedabad Mfg. & Calico Printing Co. Ltd. 1976 CTR (Guj) 214: (1977) 106 ITR 159. In case of Shew Paper Exchange vs. ITO (1974) 93 ITR 186 (Cal), Calcutta High Court has laid down principle that Tribunal has no power to review its order. All that Tribunal can do is to correct obvious errors. In case of V. R. Sonti vs. CIT (1979) 117 ITR 838 (Cal), Calcutta High Court held that when there is divergence of opinion amongst High Courts on certain point, particular view on said point cannot be said to be obvious error that can be rectified by Tribunal under s. 254. Similarly, Supreme Court in case of T.S. Balaram, ITO vs. Volkart Bros. (1971) 82 ITR 50 (SC) has laid down well known rule of law that mistake apparent on record must be obvious and patent and not something which can be established by long-drawn process of reasoning on points on which there may be conceivably two opinions. In my considered view, order of Tribunal dt. 11th Oct., 1984 has been based on facts on record as well as contentions raised before it and there is no apparent error therein which can be rectified under s. 253 of Act. This is all more so as reference application against said order filed by Department has been rejected by Tribunal by its order dt. 14th May, 1985 on ground that proposed question therein had become infructuous. As stated earlier, ITO has been directed to make fresh assessment which will provide full remedy to assessee as well as ITO. In any case, matter cannot be said to be free from doubt or not open to debate. Hence, miscellaneous application filed by Department deserves to be rejected. THIRD MEMBER ORDER Y. Upadhyay, Vice President following question has been assigned to Third Member under s. 255(4) of Act: "Whether, on facts and in circumstances of case, order dt. 11th Oct., 1984 can be recalled under s. 254 of IT Act, 1961 on grounds stated in miscellaneous application dt. 8th Oct., 1985 filed by Department?" facts necessary for disposal of question referred to Third Member are that assessee is limited company and assessment for asst. yr. 1977-78 was made by ITO on 21st Aug., 1980 on total income of Rs. 4,23,32,180. total income determined by ITO included various additions and disallowances. assessee being aggrieved by order of ITO filed appeal and CIT (A) vide his order dt. 5th April, 1984 allowed relief in part to assessee. assessee as well as Department was aggrieved by order of C I T (A) and, accordingly, appeals were filed by both parties. Department in its appeal in IT Appeal No. 1383 (Cal) of 1982 took only objection that CIT (A) was not justified in allowing weighted deduction under s. 35B of Act on local commission and commission paid to Project & Equipment Corpn. of India Ltd. assessee, on other hand, in its appeal in IT Appeal No. 1456 (Cal) of 1982 was aggrieved on various grounds and it took effective 8 grounds in its appeal. It will be relevant at this stage to mention that CIT took action under s. 263 for asst. yr. 1977-78 and after issuing show-cause notice and giving opportunity of being heard to assessee on 20th Aug., 1982 set aside assessment on ground that point of gratuity has not been properly considered by ITO. While setting aside assessment, CIT in concluding paragraph observed as follows: "I, therefore, set aside assessment for year 1977-78 and direct ITO to make fresh assessment after examining all these issues and giving assessee proper opportunity of producing whatsoever evidence assessee choses to rely upon." It appears that on receipt of order under s. 263, ITO made assessment. He proceeded with net income as computable after relief granted by CIT (A) vide his order dt. 5th April, 1982 and thereafter he made some additions against which appeal was filed before CIT (A). appeals of assessee and Department were heard together on 1 1 t h Oct., 1984 and it was brought to notice of Bench that assessment order passed by ITO on 21st Aug., 1980 has been set aside by CIT under s. 263 and ITO pursuant to order of CIT has passed fresh order which is subject-matter of appeal before CIT (A) and, therefore, appeals are infructuous. order of CIT under s. 263 was filed in course of hearing. Bench relying upon statement of counsel dismissed both appeals. Department moved miscellaneous application that dismissal of order on ground that assessment had been set aside under s. 263 and fresh assessment had been made by ITO is not proper, because assessment was set aside in part and this fact was not examined by Tribunal when appeals were dismissed. On this issue, there was difference of opinion between Members constituting Bench. Hon ble Judicial Member came to conclusion that there was partial set aside by CIT under s. 263 and, therefore, right of appeal survives so far as at least Department was concerned. Judicial Member supported his conclusion by relying in J. K. D Costa s case (supra) and Surrendra Overseas Ltd. s case (supra). Hon ble Accountant Member, on other hand, referring to direction of CIT came to conclusion that it was debatable point whether set aside was partial or otherwise and he supported his conclusion relying in Volkart Bros. case (supra), Manji Dana s case (supra), Devi Prasad Kejriwal s case (supra), Maneklal Harilal Spg. & Mfg. Co. Ltd. s case (supra) and Ahmedabad Mfg. & Calico Printing Co. Ltd. s case (supra). As Members constituting Bench did not come to common conclusion, point of difference was referred to President under s. 255(4) and, accordingly, matter has been assigned to Third Member. Shri Lahiri, Departmental Representative, indicated that show- cause notice issued by CIT had been incorporated in order of CIT under s. 263 and order under s. 263 was filed before Bench. It is clear from order that action was taken only for allowance of gratuity and, therefore, CIT could have not set aside whole of assessment. This was legal mistake in order of Bench when appeal of Department was dismissed. Department was in appeal against relief allowed under s. 35B and this right of Department extinguished without giving finding and holding that appeals are infructuous, because ITO has framed assessment pursuant to order under s. 263 and order passed by him is subject-matter of appeal. Shri Chatterjee, counsel of assessee, on other hand, very kly supported conclusion of Accountant Member and urged that whether s e t aside was wholly and partial is debatable point and, therefore, conclusion of Accountant Member placing reliance in Volkart Bros. case (supra) should be maintained. assessee as well as Department both filed appeals being aggrieved against order of CIT (A). right of appeal was duly exercised by both parties when appeal were filed before Tribunal. Once appeals are on record of Tribunal, they can only be disposed of in two manners. Firstly, appeals are heard and disposed of on merit. second manner of disposal for appeals is that appellant who has filed appeal may withdraw appeal with permission of Bench. situation of second manner had not arisen in present case. appeals had been heard, however, on facts and in circumstances of case which were stated before Tribunal at time of hearing, appeals were treated as infructuous and, consequently, they were dismissed. record of Tribunal had been perused and moreover Third Member was party in Division Bench when appeals were dismissed. order under s. 263 of CIT was filed. show-cause notice issued by CIT for taking action under s. 263 had been verbatim incorporated in order. It is clear from show-cause notice that action under s. 263 was taken only on point of gratuity and on that issue itself CIT came to conclusion that order passed by ITO was erroneous and prejudicial to interests of Revenue. order passed by CIT under s. 263 had been maintained by Tribunal vide its order in IT Appeal No. 1988 (Cal) of 1982 dt. 30th Jan., 1984. Under said situation when action under s. 263 was taken only on t h e point of gratuity and assessment was set aside by CIT, assessment can only be set aside on point on which show-cause notice had been issued for taking action under s. 263. Therefore, even if CIT in his order under s. 263 indicated that assessment is set aside for making fresh assessment, it can be read only in legal parameter of jurisdiction of CIT and set aside was only partial one. If this fact would have been noticed by Division Bench, Division Bench would not have at least dismissed Departmental appeal which will not get right of appeal even if assessment is made pursuant to order under s. 263 by ITO. This legal mistake crept when Division Bench disposed of appeal of Department. miscellaneous petition of Department had been looked into carefully and miscellaneous application has not been happily worded. There was no cause of action so far as assessee s appeal is concerned. However, question is comprehensive. same cannot be amended and question will have to be answered in affirmative or negative. There is no option before Third Member. There was legal mistake in order of Tribunal who passed order without considering order under s. 263 of CIT. Judicial Member has much discussed about powers of CIT under s. 263, whereas, Accountant Member has mainly gone on point that issue raised was debatable and, therefore, there was no mistake in order of Tribunal. fact had been stated earlier that Tribunal did not notice order passed under s. 263 and consequent of such order there is legal mistake in order of Tribunal. Consequently, question referred to Third Member is answered as follows: "On facts and in circumstances of case, order dt. 11th Oct., 1984 can be recalled under s. 254 of IT Act, 1961 on grounds stated in miscellaneous petition dt. 8th Oct., 1985 filed by Department." case is, therefore, referred back to Division Bench for passing order in conformity with decision of majority. *** INCOME TAX OFFICER v. GENERAL ELECTRIC CO. OF INDIA LTD.