TMI Blog1985 (8) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Company and Ganesh Trading Company, respectively? In the latter reference, the question is raised at the instance of the Revenue. It reads as follows: " Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal erred in holding that the enhancement of the income of the assessee by the Appellate Assistant Commissioner to the extent of Rs. 1,11,900 in the case of M/s. Shivshankar Co. was made by travelling beyond the source of the income disclosed in the assessment order or by travelling outside the record ? " The year of assessment concerned is 1951-52, the " previous year" being Samvat year 2007. The assessee dealt in yarn and cloth. The Income-tax Officer, in the course of the assessment of the assessee's income, found the profit disclosed to be lower than that of others in the same line of business. He found that a large proportion of the total sales of yarn by the assessee had been made to two concerns, namely, Ganesh Trading Company and Mahavir Trading Company. He found, on examining the accounts of these two concerns in the assessee's books of account, that there were deposits by Ganesh Trading Company of Rs. 10,49,319 against s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been accounted for by the assessee and represented excess sale proceeds. Since these two concerns were benamis of the assessee, the withdrawals from their accounts made by " self " cheques would also have to be treated as the concealed income of the assessee. The Income-tax Officer suggested that the Appellate Assistant Commissioner should take necessary steps in this behalf. In the course of his inquiry, the Income-tax Officer came upon transactions in yarn between the assessee and Shivshankar and Company. He noted in his remand report the evidence upon which he found that Shivshankar and Company was as such a benami concern of the assessee as were Ganesh Trading Co. and Mahavir Trading Company. He recommended that the surplus in its account and withdrawals by " self" cheques should also be treated as the concealed income of the assessee. Upon the basis of the material contained in the remand report, the Appellate Assistant Commissioner enhanced the income of the assessee in the sum of Rs. 5,30,221 and directed the Income-tax Officer to modify the assessment accordingly. The enhancement took into account the concealed income of the assessee in relation to the three benami conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 891, that the powers of enhancement conferred upon the Appellate Assistant Commissioner extended only to matters considered by the Income-tax Officer; if a new source of income had to be considered, then the power of remand should be exercised and the Income-tax Officer be required to deal therewith. It held that the principle that emerged was that the Appellate Assistant Commissioner had no jurisdiction to assess a source of income which had not been processed by the Income-tax Officer and which was not disclosed either in the returns filed by the assessee or in the assessment order and that, therefore, the Appellate Assistant Commissioner could not travel beyond the subject-matter of assessment. In other words, the power of enhancement conferred upon the Appellate Assistant Commissioner was restricted to the subject-matter of assessment or the source of income which had been considered expressly or by clear implication by the Income-tax Officer from the point of view of the taxability of the assessee. There had to be something in the assessment order to show that the Income-tax Officer had applied his mind to the particular subject-matter or the particular source of income wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lonji Mistry's case [1962] 44 ITR 891 and Chamaria's case [1967] 66 ITR 443, that the powers of enhancement conferred on the Appellate Assistant Commissioner only extended to the matters considered by the Income-tax Officer and if a new source had to be considered, then the power of remand should be exercised. In the former case it noted, " by the exercise of the power to assess fresh sources of income, the assessee was deprived of a finding by two Tribunals and one right of appeal ". In the instant case, the Appellate Assistant Commissioner remanded the matter in so far as, inter alia, the accounts of Ganesh Trading Co. and Mahavir Trading Company were concerned to enable the Income-tax Officer to make a detailed investigation. He gave directions that the assessee and the Income-tax Officer would be entitled to produce material in support of their respective contentions. By making this order, the Appellate Assistant Commissioner ensured that the assessee would not be " deprived of the finding by two Tribunals and one right of appeal." In the result, we hold that the enhancement made by the Appellate Assistant Commissioner pertaining to the accounts of Ganesh Trading Co. and Maha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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