2006 (9) TMI 141

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..... of assessment dated March 10, 2000 made by the Assessing Officer holding that interest on debentures and corporate borrowings is an allowable deduction, relying on the decision of the apex court in India Cements Ltd. v. CIT [1966] 60 ITR 52. 2. The facts in a nutshell are that the Assessing Officer while completing the assessment for the assessment year 1997-98 allowed the claim of the assessee with respect to Rs. 1,26,06,781 being the interest on debenture and intercorporate dividends, but disallowed other claims of the assessee. 3. Aggrieved by the disallowed portion of the assessment order, the asses- see preferred an appeal before the Commissioner of Income-tax (Appeals), who, while partly allowing the appeal and remitting the matter .....

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..... e Act is mandatory ?" 6. Before proceeding further, it is profitable to refer to the relevant statutory provision, viz., section 251 of the Act, which deals with the powers of the Commissioner of Income-tax (Appeals) : " Section 251. Powers of the Appellate Assistant Commissioner or, as the case may be, the Commissioner (Appeals).-(1) In disposing of an appeal, the Appellate Assistant Commissioner or, as the case may be, the Commissioner (Appeals) shall have the following powers- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment ; or he may set aside the assessment and refer the case back to the Income-tax Officer for making a fresh assessment in accordance with the directions give .....

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..... en allowed by the Assessing Officer and that the said aspect also needs to be re-examined, certainly leads to the conclusion that there may be an enhancement of assessment or a penalty or reduction of the amount of refund. If that be so, as contemplated under section 251(2) of the Act, referred to above, the Commissioner of Income-tax (Appeals), as rightly held by the Tribunal, should not exercise the power conferred under section 251(2) without giving a reasonable opportunity to the assessee showing against such enhancement or reduction, and to that extent the Tribunal is right in coming to the conclusion that the Commissioner of Income-tax (Appeals) has committed an error in rendering the finding that it is not clear in the assessment ord .....

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