Judgment ( 1. ) THIS is an appeal filed by the CIT (Revenue) under Section 260a of the IT Act against an order dt. 30th Sept. , 2003, passed by learned Members of Tribunal in ITA No. 26/ind/1997. This appeal was admitted for final hearing on following substantial questions of law: 1. Whether Tribunal was justified in setting aside of a finding recorded by the CIT in Section 263 proceedings by deleting a sum of Rs. 6,83,304 in relation to penalty imposed upon the assessee under the sales-tax law ? ( 2. ) WHETHER benefit of deletion amounting to Rs. 6,83,304 granted to the assessee by the Tribunal can be said to be justified and is an allowable deduction and if so under what head ? 2. The dispute pertains to asst. yr. 1989-90. It is in relation to a deduction claimed by the assessee (respondent herein) amounting to Rs. 6,83,304 paid towards penalty under the sales-tax laws. In the assessment year in question, the question arose as to whether assessee can be granted benefit of this sum (Rs. 6,83,304) for claiming deduction from computation of their gross income. According to assessee, they were so entitled to claim its benefit because it formed part of a total sum of Rs. 55 lacs which they had voluntarily surrendered to Department for being taxed in their hand during the assessment year in question. In other words, the contention of assessee before AO was that since in the year in question, the assessee has voluntarily surrendered a total sum of Rs. 55 lacs and hence, the impugned sum i. e. , Rs. 6,83,304 being a part of the surrendered sum and not over and above Rs. 55 lacs for taxing purpose, the same cannot be taxed again. It is on this reasoning, the assessee contended before the AO that a sum of Rs. 6,83,304 be not brought to tax and assessee be allowed to deduct the said sum from computation of gross total income of assessee for the year in question as part of Rs. 55 lacs. In support of this contention, the assessee also placed reliance on their two letters dt. 19th April, 1990 and 3rd March, 1992 which they had sent to Department while surrendering a sum of Rs. 55 lacs to show that a sum of Rs. 6,83,304 was part of Rs. 55 lacs. ( 3. 55 lacs. In support of this contention, the assessee also placed reliance on their two letters dt. 19th April, 1990 and 3rd March, 1992 which they had sent to Department while surrendering a sum of Rs. 55 lacs to show that a sum of Rs. 6,83,304 was part of Rs. 55 lacs. ( 3. ) THE AO, by order dt. 27th March, 1992 accepted the explanation of assessee and accordingly, granted them the benefit of Rs. 6,83,304 by deleting the same from computation of their gross total income. In other words, it was held that the amount of Rs. 6,83,304 is a part of Rs. 55 lacs which was voluntarily surrendered by assessee and hence, the same cannot be now again brought to tax for the year in question. ( 4. ) THE CIT was not satisfied with this deletion made by AO in favour of assessee and hence, he (CIT) invoked his powers under Section 263 of the Act and called upon the assessee to show as to why a sum of Rs. 6,83,304 be not included in the total income of the assessee. According to CIT, the order of AO granting the benefit of Rs. 6,83,304 to assessee was not only erroneous but was equally prejudicial to the interest of Revenue and hence, required to be corrected by taking recourse to the provisions of Section 263 ibid. An explanation of assessee was sought by granting them an opportunity of hearing. By order dt. 30th March, 1994, the CIT set aside the order of AO, dt. 27th March, 1992 insofar as it related to aforementioned impugned deletion. He held that the amount of Rs. 6,83,304 was not the part of Rs. 55 lacs as contended by assessee and hence, it has to be brought within the tax net of assessee during the period in question. According to CIT, the order of AO was erroneous as also prejudicial to the interest of Revenue within the meaning of Section 263 ibid and hence, cannot be sustained. It was accordingly, set aside by giving consequential direction to make fresh assessment in the light of observations made in the order by adding the said sum in the total gross amount of assessees income. ( 5. ) THE assessee felt aggrieved filed appeal to the Tribunal. By order dt. 24th Sept. It was accordingly, set aside by giving consequential direction to make fresh assessment in the light of observations made in the order by adding the said sum in the total gross amount of assessees income. ( 5. ) THE assessee felt aggrieved filed appeal to the Tribunal. By order dt. 24th Sept. , 1998, the Tribunal dismissed the appeal insofar as it related to this issue. Rather, the Tribunal went into the issue more in detail and finding no merit in it, upheld the order of CIT. This is what the Tribunal held in para 9 of the order: Para 9. As to the revision of the assessment order on the issue of sales-tax penalty, the letter dt. 19th April, 1990 of the assessee filed during assessment proceedings makes it abundantly clear that the assessee had made false claim of deduction in the return, as the amount (s) of sales-tax penalty had been claimed and allowed in earlier years. It was in this backdrop that the assessee had requested the AO to increase the returned income by the amount of sales-tax penalty of Rs. 6,83,304. If that be so, the question of including this sum in the surrendered amount of Rs. 55 lacs does not arise, as the fact of inclusion of the said sum being sales-tax penalty is conspicuous by its absence in the assessees letter of surrender dt. 3rd March, 1992 relating to asst. yr. 1989-90. Paras 3 and 4 thereof do not refer to sales-tax penalty. In sharp contrast, letter of surrender of the same date does make mention of sales-tax penalty in para 3 thereof in clear terms. This conduct of the assessee itself negatives the assessees claim of inclusion of the impugned sum of sales-tax penalty in the surrendered amount of Rs. 55 lacs in asst. yr. 1989- 90. Since the AO had erroneously not increased the income originally returned by the amount of sales-tax penalty of Rs. 6,83,304 as requested by the assessee, vide letter dt. 19th April, 1990 while framing the assessment, the assessment was erroneous due to non-inclusion of this sum in the total income causing prejudice to the interests of Revenue. The CIT was justified in invoking his revisionary powers in respect of this issue. ( 6. 6,83,304 as requested by the assessee, vide letter dt. 19th April, 1990 while framing the assessment, the assessment was erroneous due to non-inclusion of this sum in the total income causing prejudice to the interests of Revenue. The CIT was justified in invoking his revisionary powers in respect of this issue. ( 6. ) THE assessee accepted this order of Tribunal because they did not pursue this issue further in appeal to this Court under Section 260a ibid. In this view of the matter, the order passed by the Tribunal attained finality. ( 7. ) AS a sequel to the order passed by CIT, dt. 30th March, 1994 and later having been upheld by the Tribunal on 24th Sept. , 1998 (referred supra) the AO passed a fresh consequential assessment order dt. 25th Jan. , 1996 and accordingly, added a sum of Rs. 6,83,304 in the gross income of assessee for the period in question. Indeed while giving effect to the order passed by CIT, the AO had to add this sum while computing the total income of assessee. The assessee felt aggrieved of this assessment filed an appeal to CIT (A ). By order dt. 29th Nov. , 1996 the CIT (A) dismissed the appeal and upheld the assessment order including addition of Rs. 6,83,304. Aggrieved, the assessee filed further appeal to Tribunal. By impugned order, the Tribunal allowed the appeal filed by the assessee and deleted the addition of Rs. 6,83,304 made by AO pursuant to the order of CIT. It is against this order of Tribunal, the CIT (Revenue) has felt aggrieved and filed this appeal. As stated supra, the appeal was admitted for final hearing on aforementioned substantial questions of law. ( 8. ) HEARD Shri R. L. Jain, learned senior counsel with Ku. V. Mandlik, learned Counsel for the appellant (Revenue) and Shri Vijay Asudani, learned Counsel for the respondent (assessee ). ( 9. ) SHRI Jain, learned Counsel for the appellant (Revenue) while assailing the legality and propriety of impugned order, contended that Tribunal was in error in deleting the addition made by AO pursuant to the order of CIT passed in Section 263 proceedings. It was his contention that the issue regarding addition/ deletion of Rs. 6,83,304 had already attained finality when the order of CIT, dt. 30th March, 1994 was upheld by Tribunal by order dt. 24th Sept. , 1998. It was his contention that the issue regarding addition/ deletion of Rs. 6,83,304 had already attained finality when the order of CIT, dt. 30th March, 1994 was upheld by Tribunal by order dt. 24th Sept. , 1998. He, therefore, urged that once the issue attained finality against the assessee then in such event, the Tribunal had no jurisdiction in same proceedings arising out of consequential order of assessment to take a different view in favour of assessee. It was, therefore, his submission that Tribunal should have upheld the addition of Rs. 6,83,304 made by AO as the same was in conformity with the direction issued by CIT in suo motu revisionary proceedings. ( 10. ) IN reply, learned Counsel for the assessee supported the impugned order and urged for its upholding. Placing reliance on the decisions reported in AIR1954 All 770 , AIR1954 All 771 , AIR1985 Ker 66 , AIR1985 Ker 69 , AIR 1965 Mys 290 (V 52 C 72) : AIR 1929 Cal 163, Addl CIT v. Mukur Corporation [1978 ]111 ITR312 (Guj ), CIT v. Seshasayee Paper and Boards Ltd. [2000 ] 242 ITR490 (Mad ), P. V. Doshi v. CIT 1977 CTR (Guj) 683 : (1978) 113 ITR 22 (Guj), Sri Sri Kubereswar Mahadeva Thakur v. CIT [1992 ]196 ITR649 (Cal ) and CIT v. South India Shipping Corporation Ltd. [1998 ]233 ITR546 (Mad ), learned Counsel contended that the finding recorded by CIT and later upheld by the Tribunal against the assessee would not be a bar in subsequent proceedings arising out of appellate orders to again decide the issue on merits. It was his submission that firstly the order of CIT passed in Section 263 proceedings is not final and secondly, it would not operate as res judicata. ( 11. ) HAVING heard learned Counsel for the parties and having perused record of the case, we are inclined to allow this appeal and set aside the impugned order passed by Tribunal. ( 12. ) IN our considered opinion, the issue regarding addition of Rs. 6,83,304 having attained finality in the earlier proceedings, which travelled from the suo mota revisionary order of CIT, dt. 30th March, 1994 to that of an order dt. 24th Sept. , 1998 passed by Tribunal, against the assessee, the same had to be decided against the assessee in consequential proceedings for giving effect to the said orders. 6,83,304 having attained finality in the earlier proceedings, which travelled from the suo mota revisionary order of CIT, dt. 30th March, 1994 to that of an order dt. 24th Sept. , 1998 passed by Tribunal, against the assessee, the same had to be decided against the assessee in consequential proceedings for giving effect to the said orders. Indeed, neither the AO, nor CIT (A) nor Tribunal had the jurisdiction to decide this issue again on its merits contrary to the earlier finding of Tribunal. Once the issue was decided in hierarchical system in the same year against any party, then it could not be allowed to be reagitated in collateral proceedings arising in the same year by any party. ( 13. ) IN our considered opinion, the Tribunal was bound by the finding recorded by the Tribunal in its earlier order, dt. 24th Sept. , 1998 quoted supra. It is not in dispute that the CIT had jurisdiction to invoke the powers conferred under Section 263 ibid for recalling of the order passed by AO on the ground of it being erroneous and prejudicial to the interest of Revenue. It is also not in dispute that CIT did find that these two grounds did exist in the order of AO and accordingly, recalled the same. It is also not in dispute that Tribunal too concurred with the finding of CIT when it proceeded to dismiss the appeal filed by the assessee. It is also not in dispute that assessee though had the opportunity to challenge the appellate order of Tribunal in further appeal under Section 260a ibid but for the reasons best known to them, they did not prefer to challenge and accepted the appellate order of Tribunal. ( 14. ) IN a situation emerging from the undisputed facts taken note of supra, we are clearly of the view that Tribunal had no jurisdiction to deal with the same issue in an appeal arising out of consequential order of assessment. What is unfortunate is that Tribunal did not even refer to its earlier order dt. 24th Sept. , 1998 and hence, failed to consider its legal effect in the proceedings arising out of consequential assessment orders thereby committing an error of law. ( 15. ) IN our considered view, it is a case where an issue regarding addition of Rs. What is unfortunate is that Tribunal did not even refer to its earlier order dt. 24th Sept. , 1998 and hence, failed to consider its legal effect in the proceedings arising out of consequential assessment orders thereby committing an error of law. ( 15. ) IN our considered view, it is a case where an issue regarding addition of Rs. 6,83,304 was debated inter se parties on merits and eventually merged into the appellate order of Tribunal which attained finality against the assessee. It could only be examined on its merits by High Court in an appeal filed by assessee under Section 260a ibid against the said order (24th Sept. , 1998 ). If for any reasons, the assessee gave up the challenge then issue attained finality. The only thing that survived in such circumstance was implementation of the finding which attained finality by passing consequential order by AO, if necessary, so as to make the order in conformity with the final order passed in the case. ( 16. ) WE have gone through the several decisions cited at the Bar by the learned Counsel for the assessee mentioned supra. We are afraid none of them are on the issue involved. They are distinguishable on facts. We, therefore, need not take the trouble of dealing with each and every case to show as to how they are distinguishable. It will in our opinion, only increase the length of our judgment with no utility and hence, we refrain from undertaking this exercise. ( 17. ) ACCORDINGLY and in view of foregoing discussion, the appeal succeeds and is allowed. Impugned order insofar as it relates to deletion of Rs. 6,83,304 in computation of gross income of assessee for the assessment year in question is set aside. As a consequence, the order passed by CIT (A) which confirmed the order of AO on this issue is restored. No costs.