TMI Blog1970 (3) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... other points covered by that assessment order. The assessee, therefore, filed an appeal to the Appellate Assistant Commissioner on those other points. Pending that appeal, the same Income-tax Officer made his order of assessment dated 17th March 1958, in respect of the next assessment year 1953-54. In that assessment he granted depreciation, not on the footing of the actual cost of Rs. 12,00,000 but on the footing of the first proviso to section 10(5)(a) by determining the original cost to the purchaser, i.e., the assessee, which he calculated at Rs. 6,80,000. The assessee appealed to the Appellate Assistant Commissioner in respect of this assessment order relating to the assessment year 1953-54. In respect of the assessment year 1954-55 also the Income-tax Officer in his assessment order allowed to the assessee depreciation on the said ship on the same footing as in respect of the assessment year 1953-54. The Appellate Assistant Commissioner sent to the assessee a notice of enhancement under section 31(3) in respect of the assessment year 1952-53. All the three appeals came up for hearing before the Appellate Assistant Commissioner on 23rd November, 1959. He noticed the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant Commissioner can set aside an assessment and give directions for a fresh assessment being made only if the original assessment under appeal before him suffered from an infirmity, but that in the present case the failure of the Income-tax Officer to exercise his power under the first proviso to section 10(5)(a) could not be said to be an infirmity which affected the assessment made by the Income-tax Officer. The Tribunal set aside the order of the Appellate Assistant Commissioner and the appeal before the Appellate Assistant Commissioner was restored to his file with a direction that he should deal with the contentions as raised by the assessee in the appeal before him for the year 1952-53. Under these circumstances, at the instance of the department, the following question of law has been referred : " Whether the Appellate Assistant Commissioner's order setting aside the assessment and directing the Income-tax Officer to make a fresh assessment so as to recompute the depreciation allowance for the ship 'S. S. Englestan' was in accordance with the provisions of section 31(3)(a) and (b) of the Income-tax Act ? " Under the provisions of section 10, the assessee was entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be plenary and to be co-extensive with the powers of the Income-tax Officer and that he therefore had the power to do everything which the Income-tax Officer could have done. His third contention was that the powers of the Appellate Assistant Commissioner under section 31(3) are not only appellate but also revisional. He contended that, therefore, the Appellate Assistant Commissioner had the power to make the order which he made in this case in respect of the assessment year 1952-53. All these three contentions relate to the powers of the Appellate Assistant Commissioner under section 31(3). Mr. Dastur, the learned counsel for the assessee, urged his contentions, which, according to us, can be divided into five parts or points. His first point was that three appeals in respect of the assessee's assessment years 1952-53, 1953-54 and 1954-55 came up for hearing before the same Appellate Assistant Commissioner and on one and the same day which was a purely accidental factor. He pointed out that in respect of the assessment year 1952-53 the Income-tax Officer had accepted the assessee's claim for depreciation allowance on the basis of actual cost and his assessment order does not sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted by the provision under that section requiring notice to be issued to the assessee before the Appellate Assistant Commissioner exercises his power to enhance the assessment but there is no provision for the issuing of such a notice to the assessee when the Appellate Assistant Commissioner intends to exercise any other power available to him under section 31(3), including the power to set aside the assessment. He further pointed out that the Appellate Assistant Commissioner did in fact actually issue a notice to enhance, but did not in fact exercise the power to enhance. He contended that that was because the Appellate Assistant Commissioner must have realised that he could not exercise his power to enhance because of the provisions of the first proviso to section 10(5)(a) under which it was only the Income-tax Officer who could exercise the power conferred thereunder and that too only with the previous approval of the Inspecting Assistant Commissioner. He contended that in making the order setting aside the assessment and directing a fresh inquiry the only object of the Appellate Assistant Commissioner was that the Income-tax Officer should proceed under that first proviso and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the sense of revising those matters about which the assessee makes a grievance, but a revising authority in the sense that once the appeal is before him he can revise not only the ultimate computation arrived at by the Income-tax Officer but he can revise every process which led to the ultimate computation or assessment, that is, in other words, what he can revise is not merely the ultimate amount which is liable to tax, but he is entitled to revise the various decisions given by the Income-tax Officer in the course of the assessment and also the various incomes or deductions which came in for consideration of the Income-tax Officer. The decision in that case shows that it would of course not be open to the Appellate Assistant Commissioner to introduce in the assessment new sources of income, and the assessment must be confined to the subject-matter of the original assessment. The decision of the Supreme Court in Commissioner of Income-tax v. McMillan and Co. shows that the Appellate Assistant Commissioner has the power even to review a matter which is only a matter "in the opinion of the Income-tax Officer" under the proviso to section 13 and in reviewing the order he can e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Officer and direct him to proceed according to law. The third point urged by Mr. Dastur was that the Appellate Assistant Commissioner has by this order sought to indirectly bring about a result which he could not himself directly by his own order bring about. He contended that under the provisions of the first proviso to section 10(5)(a) the authority who can proceed thereunder is the Income-tax Officer and the authority whose previous approval is required is the Inspecting Assistant Commissioner. He contended that the Appellate Assistant Commissioner himself could not, therefore, proceed under that proviso and make an order of allowing depreciation on the basis of its provisions, which would reduce the amount of depreciation allowable and thereby enhance the assessment. The order of the Appellate Assistant Commissioner setting aside the assessment will, however, ultimately bring about the identical result, but only indirectly and that, therefore, the order is invalid. Now, in our case the Income-tax Officer had the power to proceed under the first proviso to section 10(5)(a). He, however, did not exercise it. It is a case of non-exercise of power. The judgment to the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not have the effect of enabling the Income-tax Officer to bring in a new subject-matter, as the subject-matter, viz., the claim for depreciation, will remain the same. The only effect of the order will be that it will be possible for the Income-tax Officer to consider and after due consideration apply only an alternative method for calculating the same claim for deduction for depreciation allowance. In our opinion, therefore, it was competent for the Appellate Assistant Commissioner to pass the order setting aside the assessment with a direction to make a fresh assessment according to law. Mr. Dastur's fourth point was that it has been held that the Income-tax Tribunal's powers are the same as those of the Appellate Assistant Commissioner except possibly the power to enhance the assessment. He contended that the Tribunal has no power to enhance, but has all the other powers which the Appellate Assistant Commissioner has under section 31(3), and that it shows that the Tribunal may perhaps not have the power to enhance assessment simply because that is the only power the exercise of which can result in detriment to the assessee. He contended that it must, therefore, be inferred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Commissioner of Income-tax v. Rai Bahadur Hardutroy Motilal Chamaria the judgment of the Gujarat High Court in Commissioner of Income-tax v. Jagdish Mills Ltd. and another judgment of the Gujarat High Court in Prabhudas Ramji v. Commissioner of Income-tax The judgment of the Supreme Court is to the effect that the Appellate Assistant Commissioner's powers are restricted to the source of income as mentioned in the return and in the assessment order. He contended that the judgment of the Gujarat High Court in Commissioner of Income-tax v. Jagdish Mills Ltd. shows that his powers do not extend to any matter which has never been considered by the Income-tax Officer and that the other judgment of the Gujarat High Court in Prabhudas Ramji v. Commissioner of Income-tax also shows that his powers do not extend to a matter which was not considered and processed by the Income-tax Officer. Now, in our opinion, these judgments have no relevance to the facts of this case. In our case what is relevant is not a source of income, that being the point to which all these judgments relate, but a deduction by way of an allowance for depreciation. The above judgment of this High Court in Narro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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