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2016 (3) TMI 957 - ITAT LUCKNOW

2016 (3) TMI 957 - ITAT LUCKNOW - TMI - Validity of provisions of section 251(2) invoked by CIT(A)- enhancement of income - examination of new source of income - Held that:- Undisputedly the Assessing Officer has made disallowance under the head gross profit rate and disallowance of certain expenses claimed by the assessee under different heads. The Assessing Officer has not examined the issue of sundry debtors and sundry creditors available in the balance sheet, but during the course of hearing .....

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expediency for advancement of loan on the borrowed funds to the sister concern. In the light of these facts, of the considered opinion that the ld. CIT(A) has adjudicated a new issue which was not even touched upon by the Assessing Officer for making disallowance in the hands of the assessee.

Also carefully perused the judgment of CIT vs. Sardari Lal & Co. (2001 (9) TMI 1130 - Delhi High Court ), in which Hon'ble High Court has adjudicated the powers of the ld. CIT(A) conferred under .....

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s jurisdiction. Therefore, the addition resulting into enhancement of income is not sustainable in the eyes of law. - Decided in favour of assessee - ITA No. 409/LKW/2015 - Dated:- 13-1-2016 - Sunil Kumar Yadav, JM For the Appellant : Shri S C Agrawal, Adv For the Respondent : Shri Harish Gidwani, DR ORDER Per Sunil Kumar Yadav This appeal is preferred by the assessee against the order of the ld. CIT(A) on a solitary issue that the ld. CIT(A) has erred in invoking the provisions of section 251(2 .....

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under different heads on account of personal use of vehicle and non-maintenance of bills and vouchers. Accordingly, small additions were made under the head out of trading account, out of scooter running expenses, out of deepawali expenses, out of car maintenance and out of sale of assets debited in profit and loss account. Except these additions, no other addition was made under any other head. When the matter was travelled to the ld. CIT(A), the ld. CIT(A) has observed in his order that huge b .....

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,982/-. 3. The ld. counsel for the assessee has contended that under section 251(2) of the Act, the ld. CIT(A) is empowered to adjudicate only those issues which were examined by the A.O and in respect of these issues, the ld. CIT(A) can make enhancement of income also. But on the issues, which were not touched by the Assessing Officer during the course of assessment, the ld. CIT(A) has no jurisdiction to adjudicate the same to find a new source of income. In the instant case, the A.O has only e .....

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tion made on account of enhancement is not sustainable in the eyes of law. In support of his contention, the ld. counsel for the assessee has placed reliance upon the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Sardari Lal & Co., 251 ITR 864, in which the Hon'ble High Court has categorically held, in the light of various judicial pronouncements of different High Courts and Apex Court, that whenever question of taxability of income from new source of income is conc .....

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ced reliance upon the order of the ld. CIT(A). 5. Having given a thoughtful consideration to the rival submissions and from a careful perusal of the orders of the authorities below, I find that undisputedly the Assessing Officer has made disallowance under the head gross profit rate and disallowance of certain expenses claimed by the assessee under different heads. The Assessing Officer has not examined the issue of sundry debtors and sundry creditors available in the balance sheet, but during t .....

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mercial expediency for advancement of loan on the borrowed funds to the sister concern. In the light of these facts, I am of the considered opinion that the ld. CIT(A) has adjudicated a new issue which was not even touched upon by the Assessing Officer for making disallowance in the hands of the assessee. I have also carefully perused the judgment of the Hon'ble High Court in the case of CIT vs. Sardari Lal & Co. (supra), in which Hon'ble High Court has adjudicated the powers of the .....

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reference:- "A similar question has been examined by the Apex Court as noted above, on several occasions. We do not think it necessary and appropriate to proliferate this judgment by making reference to all the decisions. A few of the important ones need to be noticed. One of the earliest decisions on the point was in CIT v. Shapoorji Pallonji Mistry (1962) 44 ITR 891 (SC). The matter related to the corresponding provisions of the Indian Income Tax Act, 1922 (hereinafter referred to as &quo .....

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) of the old Act was restricted to the subject-matter of the assessment or the source of income, which had been considered expressly or by clear implication by the assessing officer from the point of view of taxability and that the Appellate Assistant Commissioner had no power to assess the source of income, which had not been taken into consideration by the assessing officer. It is to be noted that strong reliance was placed by learned counsel for the revenue on the decision of the Apex Court i .....

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ackground of what had been stated in Daluram's case (supra) and it was observed that there was really no difference from the view expressed earlier in Shapoorji's case (supra) and Chamaria's case (supra). Learned counsel for the revenue also submitted that this conclusion of the Division Bench needs a fresh look. We have considered this submission in the background of what had been stated by the Apex Court in Jute Corporation's case (supra) and Daluram's case (supra). In Jute .....

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tions made by the Apex Court in CIT v. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC), the Apex Court held that powers of the first appellate authority are coterminous with those of the assessing officer and the first appellate authority is vested with all the wide powers, which the subordinate authority may have in the matter. In Daluram's case (supra), the decisions of Kanpur Coal's case (supra) and Jute Corporation's case (supra) were also considered and it was observed by the Apex .....

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(supra) and Chamaria's case (supra) still holds the field. It may be noted that the issue was considered in CIT v. McMillan and Co. (1958) 33 ITR 182 (SC). Referring to a decision of the Bombay High Court in Narondas Manohar Dass v. CIT (1957) 31 ITR 909 (Bom), it was held that the language used in section 31 of the old Act is wide enough to enable the first appellate authority to correct the Income Tax Officer not only with regard to a matter which has been raised by the assessed but also w .....

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purpose of computing the income of a non-resident even if the Income Tax Officer had not done so in the assessment proceedings. But, in Shapoorji Pallonji Mistry's case (supra), this court, while considering the extent of the power of the Appellate Assistant Commissioner, referred to a number of cases decided by various High Courts including the Bombay High Court judgment in Narrondas' case (supra) and also the decision of this court in McMillan and Co.'s case (supra) and held that, .....

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