1974 (9) TMI 44 - HC - Income Tax

Summary

Issues Involved:

1. Jurisdiction of the Income-tax Officer (ITO) in making a fresh assessment.
2. Inclusion of Rs. 87,595 as income from undisclosed sources.

Summary:

1. Jurisdiction of the Income-tax Officer (ITO) in making a fresh assessment:

The primary issue was whether the ITO exceeded his jurisdiction by including Rs. 87,595 as income from undisclosed sources in the fresh assessment order dated March 7, 1967. The Appellate Assistant Commissioner (AAC) had previously set aside the original assessment order and directed the ITO to re-do the assessment specifically concerning the income from the sugar business. The AAC and the Tribunal held that the ITO's jurisdiction was limited to the specific issue of estimating the income from the sugar business and that he could not include the sum of Rs. 87,595 as income from other sources.

However, the court disagreed with this view, stating that once the assessment order is set aside, the ITO is entitled to consider the entire matter afresh. The court emphasized that neither the AAC's order nor the provisions of section 251(1)(a) or section 143(3) of the Income-tax Act, 1961, restrict the ITO's powers in making a fresh assessment. The court referenced previous judgments, including Sri Gajalakshmi Ginning Factory Ltd. v. Commissioner of Income-tax and J. K. Cotton Spinning & Weaving Mills Co. Ltd. v. Commissioner of Income-tax, to support its view that the ITO has the same powers as he had originally when making the assessment order under section 143(3).

2. Inclusion of Rs. 87,595 as income from undisclosed sources:

The AAC had directed the exclusion of Rs. 87,595 from the fresh assessment on the ground that the ITO exceeded his jurisdiction. The Tribunal confirmed this decision. However, the court held that the ITO had the jurisdiction to include the sum of Rs. 87,595 as income from undisclosed sources in the fresh assessment. The court noted that the AAC did not go into the merits of the inclusion of Rs. 87,595 due to his view on the jurisdiction issue. The court suggested that the matter could be remanded to the AAC for a fresh disposal on the merits, although this specific matter was not before the court.

Conclusion:

The reference was answered in the negative and in favor of the revenue. The court held that the ITO had the jurisdiction to include the sum of Rs. 87,595 as income from undisclosed sources in the fresh assessment. The revenue was entitled to its costs, fixed at Rs. 250.