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TMI Blog2019 (5) TMI 1791X X X X Extracts X X X X X X X X Extracts X X X X ..... a notice of enhancement and thereafter made an addition of Rs. 1,20,00,000/- u/s 68 of the Act, being amount received towards share capital along with share premium, as unexplained cash credit. 3. Aggrieved the assessee is in appeal before me. 4. The only contention raised by the assessee is that the enhancement made by the ld. CIT(A) is beyond his jurisdiction as he sought to tax a new and distinct source of income than what was considered by the Assessing Officer. He argued that the power of enhancement conferred on the ld. CIT(A) by the Act, is restricted to the source of income which the Assessing Officer considered in the assessment order and that it cannot be exercised for bringing to tax a new source of income. Reliance was placed on the following decisions:- CIT vs. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 (SC) CIT vs. Shapoorji Pallonji Mitry reported in 44 ITR 891 (SC) CIT vs. Associated Garments Makers reported 64 Taxman 215 CIT vs. Sardari Lal & Co. [2001] 251 ITR 864 (Delhi) (FB) CIT vs. Thrissur vs. B.P. Sherafudin reported in [2017] 87 taxmann.com 330 (Kerala) 4.1. He submitted that keeping in view the propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hamaria (1967 SCR (3) 508) "The principle that emerges as a result of the authorities of this Court is that the Appellate Assistant Commissioner has no jurisdiction, under s. 31(3) of the Act, to assess a source of income which has not been processed by the Income- tax Officer and which is not disclosed either in the returns filed by the assessee or in the assessment order, and therefore, the Appellate Assistant Commissioner cannot travel beyond the subject- matter of the assessment. In other words, the power of enhancement under s. 31 (3) of the Act is restricted to the subject-matter of assessment or the sources of income which have been considered expressly or by clear implication by the Income-tax Officer from the point of view of the taxability of die assessee. ....... But since the Income-tax Officer has not applied his mind to the question of the taxability or nontaxability of the amount of Rs. 5,85,000, the Appellate Assistant Commissioner had no jurisdiction, in the circumstances of the present case, to enhance the taxable income of the assessee on the basis of this amount of Rs. 5,85,000 or of any portion thereof. As we have already stated. it is not open to the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal by the assessee, the Appellate Assistant Commissioner assessed him with regard to the income from the other two businesses. The head of income was the same within section 6 of the Income-tax Act, but the sources of income were different. The Patna High Court observed : "Now this section relating to appeals is enacted for the benefit of the subject and also, to the limited extent therein stated, for the benefit of the Crown. But the subject-matter of the appeal is the assessment and the scope of the appeal must in my opinion be limited by the subject-matter. The appellate authority has no power to travel beyondthe subject-matter of the assessment and, for all the reasons advanced by the appellant, is in my opinion not entitled to assess new sources of income." The view of the Patna High Court receives support from a decision of the Madras High Court in Gajalakshmi Ginning Factory v. Commissioner of Income-tax [1952] 22 ITR 502 where, at page 510, the Divisional Bench observed as follows : "Of course, it would not be open to the Appellate Assistant Commissioner to introduce into the assessment new sources, as his power of enhancement should be restricted only to the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is, however, a passage in the judgment, approving of the observations of Chagla, C.J., in Narrondas Manordass v. Commissioner of Income-tax [1957] 31 ITR 909 to the following effect: "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 subjectmatter 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 amount which is liable to tax, but he is entitled to revise the various decisions given by the Income-tax Officer in the course of the assessment and also the various incomes or deductions which came in for consideration of the Income-tax Officer." The learned Chief Justice in the judgment under appeal considers that this court has thus given approval to his view and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent has been accepted by the legislature as the true exposition of the words of the section. If it were not, one would expect that the legislature would have amended section 31 and specified the other intention in express words. The Income-tax Act was amended several times in the last 37 years, but no amendment of section 31(3) was undertaken to nullify the rulings, to which we have referred. In view of this, we do not think that we should interpret section 31 differently from what has been accepted in India as its true import, particularly as that view is also reasonably possible. CIT vs. Associated Garments Makers [64 Taxman 215] "7. Appeals are provided under section 246 of the Act before the AAC and the Commissioner (Appeals). These appeals are by the assessee aggrieved by the orders mentioned therein. Any order made under section 143(3) is appealable and the powers of the appellate court are provided in section 251 of the Act wherein appellate authority has power to confirm, reduce, enhance or annul the assessment or he may set aside the assessment and refer the case back to the ITO for making fresh assessment in accordance with directions given in appeal and after making s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) wherein it has been held that, "It is not therefore open to the Appellate Assistant Commissioner to travel outside the record, i.e., the return made by the assessee or the assessment order of the Income-tax Officer, with a view to finding out new sources of income and the power of enhancement under section 31(3) is restricted to the sources of income which have been the subject-matter of consideration by the Income-tax Officer from the point of view of taxability". Their Lordships considered the meaning of the word 'consideration' and held that, " 'consideration' does not mean 'incidental' or 'collateral' examination of any matter by the Income-tax Officer in the process of assessment. There must be something in the assessment order to show that the Income-tax Officer applied his mind to the particular subjectmatter or the particular source of income with a view to its taxability or to its non-taxability and not to any incidental connection". In the instant case, the AAC had himself, after issuing notice, considered the new material and had gone into new sources of income for the consideration of which he had no jurisdiction. 8. In fact, we fail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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