TMI Blog1965 (11) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by his widow) a medical practitioner and for the year 1946-47 was assessed by the Income-tax Officer on an income of Rs. 1,50,420. He had returned an income of Rs. 420 only as his professional income. The Income-tax Officer found that he had purchased a house in Mussoorie for Rs. 21,000; when he was asked to explain the source of the money, he replied that he had Rs. 30,000 in cash with him. The Income-tax Officer disbelieved this source of the money and, taking other facts into consideration, inferred that he had derived Rs. 1,50,000 from the business of speculation in the relevant accounting year. The assessee filed an appeal. The Appellate Assistant Commissioner held that the assessee had received during the accounting year only Rs. 30,000 in addition to the returned income and that it was not from the business of specualation but from a source other than the sources specified in section 6 of the Indian Income-tax Act. Accordingly, he reduced the amount of assessment by Rs. 1,20,000. In further appeal to the Tribunal the assessee raised the question of the Appellate Assistant Commissioner's jurisdiction to treat the amount of Rs. 30,000 as income from any other source when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eads and the income from capital gains and the total is the income to be charged with the tax. " Assessment " means determination of the total income, vide section 23, sub-sections (1), (3), (4), (5) and (6) in which the legislature uses the phrases "assess the total income of the assessee and determine the sum payable by him on the basis of such assessment ", " make the assessment to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment ", " the total income of the firm has been assessed" and " the amount of the total income on which the determination has been based." These phrases make it clear that assessment consists of determining the total income and the tax payable is based on the assessment, i.e., the sum so determined. The rate at which the tax is chargeable on the sum assessed is fixed by law and ordinarily there is no controversy about it; whatever controversy one comes across is about the amount assessed. Once an Income-tax Officer has assessed the total income !he question of the heads from which it has come ceases to be of any relevancy to the question of the amount of the tax payable. An appeal is provided to an Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... securities comes under the head (ii) or head (iv). This is a question entirely different from the question whether an Appellate Assistant Commissioner has power or not to correct the wrong head in which an income has been placed by an Income-tax Officer. If an income can come under the head (ii), it should not be placed in head (iv) but it does not follow that, if it is wrongly placed in head (iv) by an Income-tax Officer, the error cannot be corrected by the Appellate Assistant Commissioner on appeal. In Narrondas Manordass v. Commissioner of Income-tax, the Bombay High Court rejected the contention that if an Income-tax Officer did not include a certain income under one head on the ground that it was not chargeable to tax, it was not open to the Appellate Assistant Commissioner on appeal to include it in the assessment under that head. The High Court confirmed the order of the Appellate Assistant Commissioner of inclusion of the income because the income had been considered by the Income-tax Officer, the " item ...... had been subjected to the process of assessment Chagla C. J. further said at page 919 : "...the Appellate Assistant Commissioner has been constituted a revising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded an income was considered by an Income-tax Officer, the Appellate Assistant Commissioner has the fullest jurisdiction in respect of it; he can include it in the assessment, even though it was excluded by the Income-tax Officer, and naturally, when be includes it, he must include it under one head or another. Even though the Income-tax Officer had not included it under any head, it can be included under one head or another. There is no justification for saying that, while be can do so, he cannot take out an income wrongly included under one head by an Income-tax Officer and include it under the correct head. As regards an income, there are four possible questions that can be raised in an appeal before an Appellate Assistant Commissioner: (1) regarding its amount, (2) regarding its being wrongly included if not included in the assessment by the Income-tax Officer, (3) regarding its being included under a wrong head, and (4) any combination of two or more of the above. If the question is about the amount only, the Appellate Assistant Commissioner has complete jurisdiction to vary it in any way as already explained. As regards question No. 2, there are authorities laying down that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an income not considered by an Income-tax Officer, it cannot be said categorically that section 31(3)(a) does not permit an Appellate Assistant Commissioner to include it in the assessment. In any case, the authorities that have been cited before us do not lay down that an Appellate Assistant Commissioner has no jurisdiction to transfer an income from one head to another. In respect of an income not considered by an Income-tax Officer it can be said that when the Appellate Assistant Commissioner includes it under a particular head he assesses a new source or head of income as observed by the High Court of Patna in the case of Jagarnath Therani, but when he transfers it from one head to another it cannot be said that he assesses a new head of income. It was made clear by Chagla C. J. in the case of Shapoorji Pallonji Mistry that nothing turns upon whether a particular head as a source of income had been considered by the Income-tax Officer or not and that an Appellate Assistant Commissioner acquires jurisdiction to make any order in respect of an income from the mere fact that it had been considered by the Income-tax Officer. The power conferred by section 31(3)(a) is in widest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. As the object behind an assessment proceeding is to assess the total income, all the decisions and orders of an Income-tax Officer are for the sole purpose of determining what is the total income. An Appellate Assistant Commissioner has complete jurisdiction over the assessment, i.e., he can do anything to the amount assessed. This power to do anything with the amount assessed necessarily includes the power to interfere with any order or decision of the Income-tax Officer which has led to the assessment. In other words, if he has treated a certain income as falling under one head, the Appellate Assistant Commissioner has jurisdiction to hold that it was derived from another head. As regards varying the amount of the income assessed, it cannot be disputed that it can be maintained or reduced or enhanced. Our answer to the question is, therefore, in the affirmative. We direct that a copy of the judgment shall be sent to the Tribunal under the seal of the court and the signature of the Registrar as required by section 66(5) of the Income-tax Act. The Commissioner of Income-tax, U. P., shall get his costs of the reference which we assess at Rs. 200. Counsel's fee is assessed a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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