TMI Blog1967 (1) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... oss profits. He estimated the same at 10 per cent. of the overall turnover. To the gross profit attributable to the business in groundnut oil and cake, he added a sum of Rs. 27,563 on the ground that the percentage of yield as returned was low. The officer thought that the correct percentage of yield should be 12 1/2 per cent. Besides his estimate of the correct percentage of the profits, to the gross turnover or the gross value of the raw material, he sought assurance to his opinion in certain other features of the assessee's accounts. He found on an examination of the accounts that there were entries purporting to be borrowings from eight different persons adding up to a sum of Rs. 33,776 which were suspicious and could not be regarded as genuine; he also found that entries relating to a deposit and a withdrawal of Rs. 14,000 on 15th January, 1948, were similarly open to suspicion. He did not, however, make those entries the basis for further addition or treat them as representing a separate head of income in respect of which an addition could or should be made to the income returned. His express observations in that regard in his order were : " It should be mentioned here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his own opinion to the effect that the Income-tax Officer had given convincing reasons for making the addition in question. Thereupon, the department, represented by the Income-tax Officer, appealed to the Income-tax Appellate Tribunal. Grounds Nos. 1, 2 and 3 in the memorandum of appeal read as follows : " 1. The Appellate Assistant Commissioner's order, in so far as it relates to the deletion of the addition of Rs. 16,845 in groundnuts and Rs. 27,563 in oil and oilcakes, is erroneous and is opposed to the facts, evidence and circumstances of the case. 2. The Appellate Assistant Commissioner has not appreciated the fact that the enhancement of profits in groundnuts, oil and cake is supported by, inter alia, (1) the large difference of Rs. 1,18,431 between stock as per books and stock pledged with bank as on the last day of the accounting year and (2) presence of (a) credits in various folios totalling to Rs. 33,776, and (b) a deposit of Rs. 14,000 on January 15, 1948, in the Imperial Bank of India, which have not been satisfactorily explained in spite of opportunities given. 3. The Appellate Assistant Commissioner has failed to note that whereas the unaccounted stock amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt source or basis for addition, the Members of the Bench observed that they were substantially in agreement with the views expressed by the previous Bench in its original order of 7th April, 1958. A further argument was addressed before the Tribunal that a re-making of the account on the lines suggested by the Tribunal may result in the tax liability getting enhanced beyond the figure computed by the original assessing authority, which was disposed of by them with the observation : It is in the interests of the assessee himself that the question of cash credits and the bank deposit should be examined on their own merits ; if the final result, after the investigation is carried out, turns out to the detriment of the assessee, then it cannot be helped. Thereupon, the assessee moved the Tribunal under section 66(1) to refer certain questions of law said to arise out of the appellate order. That application having been dismissed, the assessee approached this court with an application under sub-section (2) of section 66 of the Income-tax Act, 1922. This court, by its order dated 20th July, 1962, directed the Tribunal to draw up a statement of the case and refer the following questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 254, reads as follows : The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit." The rest of the portion of sub-section (4) of the old section 33 is repeated in sub-section (3) of the new section 254. The effect of these provisions is that the Appellate Tribunal's powers are limited to passing such orders as they may think fit on the appeal. The expression " on the appeal " clearly and indubitably points to the conclusion that the powers of the appellate authority, the Tribunal, are limited to the subject-matter of the appeal. This is necessarily so because every point dealt with by the lower appellate court, the Appellate Assistant Commissioner, need not be the subject of attack before the Appellate Tribunal. The interests of the revenue are sufficiently protected by the extensive powers given to the first appellate authority, the Appellate Assistant Commissioner. At that stage, the only appellant would be the assessee, not the department, although it is entitled to be represented by an officer of the department in support of the order of the original court. A mistake, if any, commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate court described in the Code of Civil Procedure apply to the appellate authority vide section 108 of the Code of Civil Procedure. One of the powers described therein is the power to make a remand-vide section 107(1)(b) of the Code of Civil Procedure. But that power of remand is ancillary to the main power given to the appellate authority and has to be exercised in aid of the main power and not in excess of it. Although section 107 of the Code of Civil Procedure itself does not set out the grounds on which or the circumstances in which or the purpose for which an appellate court may make an order of remand, the general principles are well settled and are stated in general terms in rule 23 of Order XLI, Civil Procedure Code. Uniform judicial interpretation placed on these powers is that the power of remand should be used sparingly and ordinarily only in cases where the appellate authority, after an examination of the material already placed on record by way of evidence, takes the view that it is not possible for it to make a just order on the appeal without the assistance of further evidence or without the assistance of a clearer finding by the authority from whose order the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e we have made to the relevant portions of the Income-tax Officer's order places it beyond doubt that limiting the addition to Rs. 20,000 was after giving the widest margin to the statement made by the assessee and was not to any extent related to the opinion of the officer in respect of other heads of addition. The only other heads under which additions were made by the Income-tax Officer were the two lines of business, viz., buying and selling of groundnut and manufacture and sale of groundnut oil and cake. It is in respect of the estimate of gross profit arising out of these two lines of business that the assessing authority found it necessary to make a re-estimate and added certain figures to the income returned by the assessee. The allegedly suspicious cash credits (that is to say, the borrowing from eight creditors as noted in the books of account which the officer found it difficult to accept as genuine) and the suspicious deposit and withdrawal of Rs. 14,000 were not treated by the officer as separate heads for making additions to the income returned. From the two sentences we have quoted from the officer's order, it is perfectly clear that the officer had no intention or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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