1987 (2) TMI 38 - HC - Income Tax

Summary

Issues involved:
The judgment involves a reference u/s 256(1) of the Income-tax Act, 1961 regarding the jurisdiction of the Appellate Assistant Commissioner to direct inquiries into transactions and the applicability of section 40A(3) of the Act.

Summary:

Jurisdiction of Appellate Assistant Commissioner:
The Appellate Assistant Commissioner directed the Income-tax Officer to inquire into transactions between entities and examine the applicability of section 40A(3) of the Income-tax Act, 1961. The Tribunal upheld this decision, leading to an appeal by the assessee.

Background of the Case:
The Income-tax Officer included profits earned by M/s. Lalchand & Co. in the hands of the assessee, suspecting it to be a benami business. The Appellate Assistant Commissioner found deficiencies in the examination of transactions and payments, leading to a remand for further investigation.

Decision and Reasoning:
The High Court concluded that the Appellate Assistant Commissioner's powers are broad enough to correct assessments to the detriment of the assessee. The directive for further examination did not introduce new income sources but addressed matters relevant to the assessment. The Tribunal's decision was deemed justified as the Appellate Assistant Commissioner did not exceed his jurisdiction in issuing the remand order.

Conclusion:
The High Court answered the question in the affirmative, ruling against the assessee. Each party was directed to bear their own costs in the reference proceedings.