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TMI Blog2001 (9) TMI 1130X X X X Extracts X X X X X X X X Extracts X X X X ..... coterminous with that of the initial authority should normally be applicable. But this question, for the purposes of the Act, has been an intricate and vexed one. There is no uniformity in judicial opinion on this question. The factual position in Union Tyres' case (1999) 240 ITR 556 (Del) was as follows : The dispute relates to the assessment year 1967-68 for which the accounting period ended on 31-3-1967. The assessed is an individual and deals in tyres. In his return for the relevant assessment year, the assessed declared a loss of ₹ 4,552 which was revised to ₹ 3,500. The said loss was computed by applying the rate of gross profit at 0.9 per cent. on the total sales of ₹ 11.75 lakhs. During the course of assessment proceedings, the assessed did not produce any books of account. The Income Tax Officer (hereinafter referred to as the 'ITO') estimated the sales at ₹ 11.85 lakhs and by applying a gross profit rate of 3.5 per cent., he made an addition of ₹ 30,756 to the declared loss. Against the said addition, the assessed preferred an appeal to the Appellate Assistant Commissioner (hereinafter referred to as the 'AAC'). Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 'the Tribunal'). The Tribunal held that the Appellate Assistant Commissioner was not justified in calling for the remand report in respect of several items, but the remand report in respect of rest of the items was sustained. The Tribunal observed that calling for the remand report in respect of some of the points would have the effect of directing the Income Tax Officer to make assessment on an entirely new footing. The revenue 's application under section 256(1) of the Act was dismissed. On being moved for reference under section 256(2) of the Act, the following question was called for : 'Whether on the facts and in the circumstances, the Tribunal was right in holding that the Appellate Assistant Commissioner could not in law call for a remand report in respect of items Nos. 1, 3, 8, 10 and (sic) mentioned in the order of the Appellate Assistant Commissioner dated 4-5-1973 ? This court was of the view that the question for consideration was whether the directions of the Appellate Assistant Commissioner to the Income Tax Officer to conduct enquiry and furnish information on the aforesaid points is within the scope of his powers under section 251(1)(a) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gross profit rate adopted by the assessing officer. In our opinion, any addition on account of unexplained investment would constitute a new source of income, which was not the subject-matter of assessment before the assessing officer and, therefore, it was not open to the first appellate authority to direct the assessing officer to conduct enquiry on the said four points. 3. At the time of hearing of the matter before us, learned counsel for the revenue submitted that any matter arising out of the proceedings, the order against which appeal has been filed is the subject-matter of the appellate proceedings before the first appellate authority. The jurisdiction of the first appellate authority in the case of an appeal against the assessment order passed by the assessing officer ranges and extends over the whole assessment as the assessment itself is the subject-matter of an appeal and the purpose and the object of the assessment and the appellate proceedings is to correctly compute and ascertain the taxable income of the assessed. Therefore, the first appellate authority's power and jurisdiction is wide and cannot be curtailed. The first appellate authority has the righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rary, learned counsel for the assessed submitted that if such a view is taken, the provisions for reopening an assessment available under section 147/148 of the Act and/or setting aside of the order on the ground that it is prejudicial to the interests of the revenue as available to the Commissioner under section 263 of the Act would be meaningless and purposeless. A similar question has been examined by the Apex Court as noted above, on several occasions. We do not think it necessary and appropriate to proliferate this judgment by making reference to all the decisions. A few of the important ones need to be noticed. One of the earliest decisions on the point was in CIT v. Shapoorji Pallonji Mistry (1962) 44 ITR 891 (SC). The matter related to the corresponding provisions of the Indian Income Tax Act, 1922 (hereinafter referred to as the old Act ). It was held, inter alia, that in an appeal filed by the assessed, the Appellate Assistant Commissioner has no power to enhance the assessment by discovering a new source of income not considered by the Income Tax Officer in the order appealed against. A similar view was expressed in CIT v. Rai Bahadur Hardutroy Motilal Chamaria (1967 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the wide powers, which the subordinate authority may have in the matter. In Daluram's case (supra), the decisions of Kanpur Coal's case (supra) and Jute Corporation's case (supra) were also considered and it was observed by the Apex Court that the appellate powers conferred on the first appellate authority under section 251 of the Act were not confined to the matter, which had been considered by the Income Tax Officer, as the first appellate authority is vested with all the wide powers of the assessing officer may have while making the assessment, but the issue whether these wide powers also include the power to discover a new source of income was not commented upon. Consequently, the view expressed in Shapoorji's case (supra) and Chamaria's case (supra) still holds the field. It may be noted that the issue was considered in CIT v. McMillan and Co. (1958) 33 ITR 182 (SC). Referring to a decision of the Bombay High Court in Narondas Manohar Dass v. CIT (1957) 31 ITR 909 (Bom), it was held that the language used in section 31 of the old Act is wide enough to enable the first appellate authority to correct the Income Tax Officer not only with regard to a matter wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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