TMI Blog1990 (8) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ted, the facts are that the assessee is engaged in the manufacture and sale of jute goods and derived income therefrom. The Income-tax Officer made the assessment on May 26, 1963, under section 143(3). Besides making some disallowance of the expenses, he added sum of Rs. 10,85,820 in the computation of the total income on the ground that there was a change in the method of valuation of the closing stock. It was contested by the assessee in appeal before the Appellate Assistant Commissioner. He deleted the addition in regard to the valuation of the closing stock and allowed relief in respect of a few other items that were being disputed. It transpired that, during the year ending October 31, 1961 (relevant to the assessment year 1962-63), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner was without jurisdiction and beyond the powers conferred under section 251 of the Income-tax Act, 1961. The Tribunal held that the observations made by the Supreme Court in CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443, squarely applied to the facts and circumstances of this case in relation to section 251 of the Income-tax Act, 1961, and, therefore, the action of the Appellate Assistant Commissioner was not tenable and was unsupportable. The addition sustained by him was thus deleted. It has been contended by Mr. Moitra, the learned advocate appearing for the Commissioner, that there is no question of enhancement in this case. It was only computation of income which had already been considered by the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allonji Mistry [1962] 44 ITR 891. We have considered the rival contentions. On the facts and circumstances of this case, we are unable to accept the views of the Appellate Assistant Commissioner. The Appellate Assistant Commissioner observed in his appellate order for the assessment year 1963-64 as follows : " In my order dated 30-3-1969 in Appeal No. 512/66-67 for the assessment year 1962-63, I have held for the reasons stated therein that income in respect of difference claim to the extent of Rs. 3,18,573 accrued in the accounting year of the appellant company ending on October 31, 1962, relevant to the assessment was given a notice of enhancement under my No. 625/122/68-69/C-I/R-Z dated March 18, 1969, to state its objection, if any, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, so far as the claim for damages for breach of contract being the difference between the market price and the contract price is concerned, it was not an item considered by the Income-tax Officer in the assessment for the assessment year 1963-64. The Income-tax Officer had added a sum of Rs. 11,12,333 being the aggregate of such claims as decreed by the High Court in the assessment year 1962-63 but, on appeal, the Appellate Assistant Commissioner thought that the entire income had not accrued in the year relevant to the assessment year 1962-63 and deleted a part of it. Accordingly, a part of the income, i.e., Rs. 3,18,573, was found to be assessable for the assessment for the year in question, i.e., assessment year 1963-64. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner. However, the High Court held that the Appellate Assistant Commissioner was not competent to enhance the assessment of the appellant. The matter was taken up by special leave to the Supreme Court. Before the Supreme Court, the question was whether, in an appeal filed by an assessee, the Appellate Assistant Commissioner can find a new source of income not considered by the Income-tax Officer and assess it under his powers granted by section 31 of the Indian Income-tax Act, 1922. There the Supreme Court, after considering several decisions, held that, in enhancing the assessment for any year, the Appellate Assistant Commissioner cannot travel outside the record, that is to say, the return made by the assessee and the assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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