TMI Blog1976 (7) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... 65 ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly upheld the impugned order of the Appellate Assistant Commissioner ? " The assessment year under reference is the year 1966-67, the relevant accounting year being the year ending 31st March, 1966. The original assessment for this year was completed on a total income of Rs. 68,539. The original assessment was reopened and a notice under section 148 of the Act was issued and in response to the said notice the assessee filed a return of income declaring a loss of Rs. 59,519. During the previous assessment proceedings, the assessee was called upon to explain the source of a fixed deposit receipt of Rs. 75,000 which had been purchased by him from the National Grindlay's Bank Ltd. on September 6, 1965, and also of Rs. 5,000 which was shown to have been paid by him to one of his wives, Shrimati Zaina Begum. The assessee explained he had taken loans loans from his other wife and minor sons as follows : Rs. 1. Shrimati Teja Begum 20,000 2. Nazir Ahmad (minor son) 35,000 3. Javeed Ahmad (minor son) 25,000 ------------- Total 80,000 ------------- It was further explained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termine the property income in the light of the complete net wealth statements and capital accretion of the assessee. (4) The statements filed by the assessee take into account agricultural income to the extent of Rs. 11,000 per year. In the year 1954-55, the assessee had denied the ownership of orchards. The record did not indicate the date of purchase of the orchard in 1956-57 during which year the ownership of the orchards had been shown. Since the statement filed by the assessee started with the capital declared on February 28, 1956, it was necessary to know the actual date of purchase of the orchard in 1956-57. (5) In order to make a proper appreciation of the statements filed by the assessee, it was necessary for the Income-tax Officer to bring on record the extent and nature of agricultural holdings and agricultural operations for each year to which the statements related and the income which is taken into account for the purpose of explaining the capital accretion on March 31, 1966. Against this order of the Appellate Assistant Commissioner, the assessee preferred an appeal before the Tribunal and urged two main contentions, namely : (1) that it was not open to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the Income-tax Officer or the Appellate Assistant Commissioner to disregard the declarations made by the declarants under the Finance Act and to reinvestigate the source of the declared income. The real controversy between the assessee and the revenue was whether it was open to the department to investigate into the source of the declared amounts, when the declared amounts were shown as having been borrowed by the assessee from the declarants. Having regard to the real controversy between the assessee and the revenue on this point, we feel that question No. 2 has not been properly framed by the Tribunal, as it does not bring out the real controversy between the parties. We, therefore, reframe the question as follows : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the order of the Appellate Assistant Commissioner with regard to the addition of Rs. 80,000 as the undisclosed income of the assessee ? " The answer to the above question involves the interpretation of the provisions of section 24(1) of the Finance Act, the relevant provision being as follows : " 24. (1) Subject to the provisions of this section, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the business of generation or distribution of electricity or any other form of power or of construction, manufacture or production of any article or thing or of processing of goods or mining ; and (iv) where the declarant is a firm, it shall be deemed to be an unregistered firm. .......... (9) Any amount of income-tax paid in pursuance of a declaration made under this section shall not be refundable in any circumstances and no person who has made the declaration shall be entitled, in respect of the voluntarily disclosed income or any amount of tax paid thereon, to reopen any assessment or reassessment made under the Indian Income-tax Act, 1922, or the Income-tax Act, 1961, or the Excess Profits Act, 1940, or the Business Profits Tax Act, 1947, or the Super Profits Tax Act, 1963, or the Companies (Profits) Surtax Act, 1964, or claim any set-off or relief in any appeal, reference, revision or other proceeding in relation to any such assessment or reassessment. (10)(a) The amount of the voluntarily disclosed income shall not be included in the total income of the declarant for any assessment year under any of the Acts mentioned in sub-section (9) if he has credited such amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fference whether he brings the declared amount into his own books in the next year in his own name or whether he brings it into his books as cash credits in the name of the declarants. In the present case the assessee could have declared the amount of Rs. 80,000 in his own name and brought it into his books in the assessment year under reference. In such an event, it would not be open to the revenue to treat this income as the assessee's income from undisclosed sources ; the voluntary disclosure scheme would operate as a bar. We do not see why the position should be different when the amount in question was declared in the name of the assessee's wife and minor sons and brought into his books as cash credits. There is a difference of opinion between some of the High Courts on the interpretation of section 24 of the Finance Act. In Manilal Gafoorbhai Shah v. Commissioner of Income-tax [1974] 95 ITR 624 (Guj), the Gujarat High Court held that the immunity against the investigation of the source of the declared income was given to the declarant and not to another person and that it was open to the department while making assessment of that person to investigate into the source of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant Commissioner. The powers of the Appellate Assistant Commissioner are defined in section 251 of the Act (corresponding to section 31(3) of the Indian Income-tax Act, 1922). Section 251(1)(a) is the relevant provision and it reads as follows : " In disposing of an appeal, the Appellate Assistant Commissioner 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 aide the assessment and refer the case back to the Income-tax Officer for making a fresh assessment in accordance with the directions given by the Appellate Assistant Commissioner and after making such further inquiry as may be necessary, and the Income-tax Officer shall thereupon proceed to make such fresh assessment and determine, where necessary, the amount of tax payable on the basis of such fresh assessment ...... Explanation.--In disposing of an appeal, the Appellate Assistant Commissioner may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Appellate Assistant Commissioner by the appellant. " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s moved by an assessee but also a revisional jurisdiction to revise the assessment with a power to enhance the assessment. So much, of course, follows from the language of the section itself. The only question is whether in enhancing the assessment for any year he can travel outside the record, that is to say, the return made by the assessee and the assessment order passed by the Income-tax Officer with a view to finding out new sources of income, not disclosed in either. It is contended by the Commissioner of Income-tax that the word 'assessment' here means the ultimate amount which an assessee must pay, regard being had to the charging section and his total income. In this view, it is said that the words, 'enhance the assessment' are not confined to the assessment reached through a particular process but the amount which ought to have been computed if the true total income had been found. There is no doubt that this view is also possible. On the other hand, it must not be overlooked that there are other provisions like sections 34 and 33B, which enable escaped income from new sources to be brought to tax after following a special procedure. The assessee contends that the powers o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en 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 find out new sources of income and the power of enhancement under section 31(3) of the Act 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. In this context '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 subject-matter or the particular source of income with a view to its taxability or to its non-taxability and not to any incidental connection. " It is the contention of the assessee that when the Appellate Assistant Commissioner directed the Income-tax Officer to make a fresh assessment with regard to certain items of income, he had acted in excess of the powers conferred on him under section 251(1) of the Act. It is pointed out that the Appellate Assistant Commissioner had directed the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Income-tax Officer along with his books of account, etc., and that it was only after hearing the assessee that the assessment was completed. As a matter of fact, the assessee had not made a grievance in his grounds of appeal before the Appellate Assistant Commissioner that no notice under section 143(2) was served upon him or that he was not given an opportunity of being heard by the Income-tax Officer. Therefore, the direction given by the Appellate Assistant Commissioner that the assessment should be made again after giving notice under section 143(2) was not justified. As regards the objection of the assessee against the direction given by the Appellate Assistant Commissioner for redetermining the addition of Rs. 29,464 under other sources, we do not find anything in the order of the Appellate Assistant Commissioner specifically directing the Income-tax Officer to redetermine this amount. Therefore, the apprehension of the assessee that the Appellate Assistant Commissioner has given a direction to the Income-tax Officer to redetermine the income of the assessee under other sources appears to be unfounded. As regards the direction of the Appellate Assistant Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X
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