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TMI Blog1971 (8) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... llate Assistant Commissioner was competent to substitute the figure of Rs. 3,73,075 as the amount of loss carried forward from the assessment year 1959-60 in place of the sum of Rs. 5,60,148 shown by the Income-tax Officer in the assessment order ? 4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of Rs. 2,00,348 represented capital expenditure and was not a permissible deduction under section 10(2)(xv) of the Indian Income-tax Act, 1922? " So far as the first two questions are concerned, they are concluded by authority. The first question has to be answered according to our judgment in Dalmia Dadri Cement Ltd. v. Commissioner of Income-tax (I.T.R. No. 19 of 1970, decided on 1st February, 1971). The learned counsel for the assessee contends that the decision of the Supreme Court in Commissioner of Income-tax v. Birla Cotton Spinning and Weaving Mills Ltd. (Civil Appeals throws doubt on the correctness of our decision. We have gone through the judgment of the Supreme Court. In our view, this decision does not cast any doubts on the view we expressed in I. T. Reference No. 19 of 1970 in any way. Therefore, we must hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he error under section 31, the relevant part of which is in the following terms:- "31. (1) The Appellate Assistant Commissioner shall fix a day and place for the hearing of the appeal, and may from time to time adjourn the hearing. (2) The Appellate Assistant Commissioner may, before disposing of any appeal, make such further inquiry as he thinks fit, or cause further inquiry to be made by the Income-tax Officer. (2A) The Appellate Assistant Commissioner may, at the hearing of an appeal, allow an appellant to go into any ground of appeal not specified in the grounds of appeal, if the Appellate Assistant Commissioner is satisfied that the omission of that ground from the form of appeal was not wilful or unreasonable. (3) In disposing of an appeal the Appellate Assistant Commissioner may, in the case of an order of assessment,- (a) confirm, reduce, enhance or annul the assessment, or (b) set aside the assessment and direct the Income-tax Officer to make a fresh assessment after making such further inquiry as the Income-tax Officer thinks fit or the Appellate Assistant Commissioner may direct and the Income-tax Officer shall thereupon proceed to make such fresh assessment and de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing in his own order and that he cannot correct the mistakes appearing in the order of the Income-tax Officer. The Kerala High Court has enunciated this principle in Abdul Rahiman Sait v. Income-tax Officer, and it is held that one authority cannot proceed to rectify the mistakes in the order of any other authority. But, the Appellate Assistant Commissioner also has the power of enhancing an assessment." The scope of such powers has been explained by the Bombay High Court in Narrondas Manordass v. Commissioner of Income-tax in the following terms: " It is clear that the Appellate Assistant Commissioner has been constituted a revising authority against the decisions of the Income-tax Officer; a revising authority not in the narrow sense of revising what is the subject-matter of the appeal, not in the sense of revising those matters about which the assessee makes a grievance, but a revising authority in the sense that once the appeal is before him he can revise not only the ultimate computation arrived at by the Income-tax Officer but he can revise every process which led to the ultimate computation or assessment. In other words, what he can revise is not merely the ultimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpetence of the Appellate Assistant Commissioner. The enhancement made by him is, therefore, confirmed. The contention of the learned counsel for the assessee is based on the following observations of the Supreme Court in Commissioner of Income-tax v. Amritlal Bhogilal & Co. : "The powers of the Appellate Assistant Commissioner, however wide, have, we think, to be exercised in respect of the matters which are specifically made appealable under section 30(1) of the Act. If any order has been deliberately left out from the jurisdiction of the Appellate Assistant Commissioner it would not be open to the appellate authority to entertain a plea about the correctness, propriety or validity of such an order. Indeed, if the respondent's contention is accepted it would virtually give the department a right of appeal against the order in question and there can be no doubt that the scheme of the Act is not to give the department a right of appeal to the Appellate Assistant Commissioner against any orders passed by the Income-tax Officer. The order granting registration can be cancelled by the Income-tax Officer himself either under rule 6B or under section 23(4). It may be cancelled by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connection. In the present case, it is manifest that the Income-tax Officer has not considered the entry of Rs. 5,85,000 from the point view of its taxability and, therefore, the Appellate Assistant Commissioner had no jurisdiction, in an appeal under section 31 of the Act, to enhance the assessment." These observations do not help the learned counsel for the assessee and the matter is concluded by the decision in Rai Bahadur Hardutroy Motilal Chamaria's case and reference may be made to the observations of the Supreme Court at pages 449-450 : " Therefore, it would be wholly erroneous to compare the powers of the Appellate Assistant Commissioner with the powers possessed by a court of appeal, under the Civil Procedure Code. The Appellate Assistant Commissioner is not an ordinary court of appeal. It is impossible to talk of a court of appeal when only one party to the original decision is entitled to appeal and not the other party, and in view of this peculiar position the statute has conferred very wide powers upon the Appellate Assistant Commissioner once an appeal is preferred to him by the assessee. It is necessary also to emphasise that the statute provides that, once an asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rote to the company on 12th January, 1959, asking whether the plant will be able to reduce the water content from 16% or 14% to 0%. The manufacturers promised that this would be possible but made an enquiry why this was required. There was some correspondence and ultimately on 3rd March, 1959, the company placed the order. The manufacturers asked the assessee to open an irrevocable letter of credit in their favour for pound 32,000. The same was opened on 24th July, 1959. The assessee had written to the manufacturers to embody the terms of reduction of moisture to 0% in a formal agreement, but the manufacturers refused to do so by their letter dated 23rd July, 1959. After some correspondence, the assessee-company requested the bankers to cancel the letter of credit but they were told that the letter of credit being irrevocable, could not be cancelled without the consent of the manufacturers. The manufacturers taking advantage of this position refused to release the letter of credit and the assessee was faced with the probable loss of pound 32,000 or being saddled with an onerous contract. To avoid further loss, a compromise was entered into whereby the letter of credit was released ..... X X X X Extracts X X X X X X X X Extracts X X X X
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