1992 (5) TMI 10 - HC - Income Tax

Summary

Issues involved:
The issue involves the jurisdiction of the Income-tax Officer to consider a different source of income not included in the original assessment when the assessment is set aside for fresh consideration.

Summary:

Background:
The assessment years in question are 1970-71 to 1974-75, where the late S. V. Divakar filed returns for income derived from civil contract works. After his death, his legal heir, Sri Kumar Nair, was substituted. The Income-tax Officer completed assessments under section 143(3) of the Income-tax Act. The Appellate Assistant Commissioner set aside the assessments due to ignoring evidence produced by the appellant, directing a fresh assessment.

Appellate Proceedings:
During the fresh assessment, the Income-tax Officer included the income of the assessee's wife from a separate source, alleging a benami business. The Appellate Assistant Commissioner directed the exclusion of the wife's income, which was upheld by the Tribunal, leading to the references before the High Court.

Legal Arguments:
The Revenue contended that the Income-tax Officer, when redoing the assessment, had the power to consider all relevant matters, including new sources of income. However, the High Court considered the limitations on the Assessing Officer's jurisdiction in such cases.

Court's Analysis:
The High Court emphasized that the Assessing Officer's power for fresh assessment depends on the nature of the appellate order. If the remand is open-ended, new sources of income can be considered. In this case, the direction by the Appellate Assistant Commissioner was specific and did not allow for consideration of new sources beyond the original assessment.

Conclusion:
The High Court ruled in favor of the assessee, stating that the Assessing Officer could not exceed the directions of the Appellate Assistant Commissioner in the fresh assessment. The Court highlighted that any new sources of income not part of the original assessment process could be dealt with through appropriate legal provisions like section 147 or section 263 if necessary.

Judgment:
The High Court answered the references in the affirmative, in favor of the assessee and against the Revenue, with no costs incurred. Judge S. K. Mohanty concurred with the judgment.