TMI Blog2016 (7) TMI 1504X X X X Extracts X X X X X X X X Extracts X X X X ..... and 2009-10 against respective orders passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. The assessee has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) erred in issuing the enhancement notice for the new source of income, the action being beyond the scope of section 251 (1 )(a) of The Income Tax Act, 1961, therefore needs to be quashed. 2. On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) erred in estimating 1/5th of allege total suppressed sales of ₹ 66,00,720/- as additional capital required thereby making an addition of ₹ 13,20,144/-being additional investment for carrying alleged secret/undisclosed sales by invoking provisions of section 69 merely on the basis of estimation without any cogent evidence on record. The appellant craves for to leave, add, alter, modify, delete above ground of appeal before or at the time hearing, in the interest of natural justice. 3. Both these appeals relating to different assessees on similar issue were heard together and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted the Assessing Officer to apply the GP @12% on the amount of suppressed sales and compute the addition at ₹ 7,92,091/-. Further, the Commissioner of Income Tax (Appeals) observed that the Assessing Officer while passing the assessment order had only considered the addition on the basis of gross profit, but he did not look into the additional capital required for the said enhanced turnover. Accordingly, an enhancement notice was issued by the Commissioner of Income Tax (Appeals) which is incorporated at page 4 and part of page 5 of the appellate order. In response the assessee explained that it was procuring the material on credit basis and hence no working capital was locked in conducting the business. Another plea raised by the assessee was that the issue raised on account of the suppressed enhancement was in respect of a new source of income, which was beyond the scope of the Appellate Authority. However, the Commissioner of Income Tax (Appeals) rejecting both the accounts held that 1/5th of total suppressed sale at ₹ 66,00,720/- was the additional capital required. Accordingly, an addition of ₹ 13,20,144/- was added under section 69 of the Act. 7. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals) in this regard issued an enhancement notice to the assessee who in turn of objected to the same. The case of the assessee before us is that the enhancement exercise carried on against the assessee in the present case is not warranted as the Commissioner of Income Tax (Appeals) is desirous of making addition on account of a new source of income. The Assessing Officer in the present case had only looked at the suppressed sales and worked out the addition by applying suitable GP rate. No further addition was warranted in the case. 12. Coming to the issue of the enhancement carried on by the Commissioner of Income Tax (Appeals), the powers are governed by the stipulated provisions of the Act. The Commissioner of Income Tax (Appeals) has to function within those conditions while deciding any appeal and he cannot exceed his power in making an addition on account of new source of income. In the facts of the present case before me the Assessing Officer had made the addition only on account of the suppressed production. There is no whisper in the order of the Assessing Officer viz-a-viz purchases component and its investment in the goods relating to suppressed production. Once, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -M annexed to the audited accounts shows labour charges at ₹ 14,38,060/-. Similarly, the assessee has also shown purchases to the tune of ₹ 68,11,278/-. We therefore find merit in the submission of the Ld. Counsel for the assessee that the figures in the impounded document area already entered in the regular books of account and therefore no addition is called for. Accordingly, we hold that the order of the Ld.CIT(A) enhancing the income by ₹ 25 lakhs is not proper. 14.1 Even otherwise also we are of the considered opinion that the Ld.CIT(A) was not justified in enhancing the income of the assessee by ₹ 25 lakhs. The Hon ble Supreme Court in the case of CIT Vs. Shapoorji Pallonji Mistry (Supra) has held that it would not be open to the AAC to introduce into assessment new sources, as his power of enhancement is restricted only to income which was subject matter of consideration for purposes of assessment. The Hon ble Supreme Court in the case of Rai Bahadur Hardutroy Motilal Chamaria (Supra) has held that the power of enhancement of AAC is restricted to subject matter of assessment or sources of income which have been considered expressly or by clear impl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspects of the assessment about which the assessee make a grievance and ranges over the whole assessment to correct the Assessing Officer not only with regard to a matter raised by the assessee in appeal but also with regard to any other matter which has been considered by the Assessing Officer and determined in the course of assessment. However, there is a solitary but significant limitation to the power of revision, viz., that it is not open to the Commissioner to introduce in the assessment a new source of income and the assessment has to be confined to those items of income which were the subjectmatter of original assessment. 13. Applying the above well-settled principles of law to the facts of the instant case, we are of the view that the Tribunal was justified in holding that in calling for a remand report on the aforenoted four points, the Commissioner had exceeded his jurisdiction. While computing the total business income of the assessee, the Assessing Officer had estimated the sales at an enhanced figure and had applied a higher rate of gross profit. Thus, the only matter dealt with by the Assessing Officer in the assessment order was the estimation of profits and gai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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