Judgment :- JANARTHANAM, J. The assessee is M/s Farida Prime Tannery, Madras. For the asst. yr. 1979-80, the assessment was made on 16th September, 1982, granting relief under ss. 80J and 80HH to the assessee. 2. The assessee appealed on certain other points and the appeal was disposed of by the appellate order, dt. 4th May, 1984. (a). The CIT sought to revise the assessment under s. 263 on 27th March, 1985 for the purpose of withdrawing the relief granted under ss. 80J and 80HH . (b) The Tribunal found that the relief granted under ss. 80J and 80HH , being the subject of the assessment order itself, they were capable of being subject to enhancement by the appellate authority and to that extent, they had merged with the appellate order even before the CIT could revise the assessment order. Under s. 263 , the CIT would only interfere with the order of ITO and since it had merged with the appellate order, it was not available for being reviewed by the CIT. Hence, the Tribunal cancelled the order under s. 263 as being without jurisdiction. (c) It is on these facts, the Tribunal, at the instance of the Revenue, referred the question as below for the opinion of this Court : "Whether, on the facts and in the circumstances of the case, the order of assessment can be considered to have merged with the appellate order and therefore, no longer available for review under s. 263 of the IT Act, 1961 ?" 3. Arguments of Mr. R. Sivaraman, learned counsel representing Mr. C. V. Rajan, learned junior standing counsel, representing the applicant and of Mr. Philip George, learned counsel appearing for the respondent were heard. 4. Sub-s. (1) of s. 263 relevant for the purpose, is couched in the following terms : "263. (1). The CIT may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the AO 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 or causing to be made such inquiry 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 and directing a fresh assessment". 5. From what has been extracted above, it is rather crystal clear that the CIT has powers of revision in respect of any order by the AO subject to the conditions or parameters prescribed therein. The parameters prescribed are - (i) The order passed by the AO is erroneous in so far as it is prejudicial to the interests of the Revenue; (ii) Before passing an order, it is incumbent upon the CIT to provide an opportunity to the assessee of his being heard; and (iii) Option is also available to the CIT to make an enquiry as it deems necessary. If those conditions are satisfied, it is open to the CIT to pass such order thereon as the circumstances of the case justify including an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. 6. Explanation (c) appended to the said sub-section is relevant for the present purpose and it reads as under : "Explanation :- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section, - (a) ........ (b) ....... (c) Where any order referred to in this sub-section and passed by the AO had been the subject-matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the CIT under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal". 7. The interpretation of Expln. (c) appended to sub-s. (1) of s. 263 came to be considered in the decision of Supreme Court in CIT vs. Shree Manjunathesware Packing Products & Camphor Works at the relevant portion of paragraph 13 at pages 413 and 414, which gets reflected as under : "13. In Tax Reference Case No. 11 of 1983 (CIT vs. Shri Arbuda Mills Ltd.) this Court after considering the effect of the amendment made in s. 263(1) of the Act by the Finance Act, 1989, whereby cl. (c) of the Explanation was also amended with retrospective effect from 1st June, 1988, held that 'the consequence of the said amendment made with retrospective effect is that the powers under s. 263 of the, CIT shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal. (c) of the Explanation was also amended with retrospective effect from 1st June, 1988, held that 'the consequence of the said amendment made with retrospective effect is that the powers under s. 263 of the, CIT shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal. Accordingly, even in respect of the aforesaid three items, the powers of the CIT under s. 263 shall extend and shall be deemed always to have extended to them because those items had not been considered and decided in the appeal filed by the assessee (sic). In that case the assessment was completed on 31st March, 1978, and the ITO while computing loss and income of the assessee had accepted the claim of the assessee in respect of those three items. Obviously, in the appeals filed by the assessee those were not the subject-matter of the appeals as the decision in respect thereof was in its favour. In respect of those three items, the CIT had exercised his power under s. 263 of the IT Act and, therefore, the question which had arisen for consideration was 'whether on the facts and in the circumstances of the case, the order of assessment passed by the ITO under s. 143(3) r/w s. 144B on 31st July, 1978, had merged with that of the CIT(A) dt. 15th December, 1979 in respect of the three items in dispute so as to exclude the jurisdiction of the CIT under s. 263 ?' Thus, the amendment made in cl. (c) was held to be applicable to the orders passed before 1st June, 1988" 8. On the face of the Expln. (c) as interpreted by the Supreme Court, as stated above, it goes without saying that the order of assessment cannot be said to have merged with the appellate order and therefore, no longer available for review under s. 263 of the IT Act, 1961, and the question is answered accordingly. 9. This Tax Case is thus disposed of and there shall, however, be no order as to costs, on the facts and in the circumstances of the case.