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TMI Blog1983 (3) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... w Delhi. While computing the income for the year 1970-71, the ITO noticed that there was a claim for deduction of Rs. 12,585 under the head " Entertainment " both at Madras and New Delhi. As against the said claim, he allowed only a sum of Rs. 5,000 as admissible and added back the excess sum of Rs. 7,585 to the income returned by the assessee. The assessee, aggrieved against the disallowance of a portion of the entertainment expenses, filed an appeal before the AAC. The AAC confirmed the finding of the ITO regarding the disallowance of the portion of the claim made under the head " Entertainment ". However, he found that the assessee had collected a total sum of Rs. 12,696 both at Madras and New Delhi under the head " Charity " and the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443, held that since the assessee had not shown the receipts by way of charity in the return and the same not having been considered by the ITO during the assessment, it was not open to the AAC to bring the charity collections as a trading receipt and to include it in the taxable income. The decision of the Tribunal, in so far as it relates to the jurisdiction of the AAC to enhance the assessment, has been challenged in this reference by the Revenue. The Tribunal has not, however, gone into the merits of the assessability of the receipts under the head " Charity " and, therefore, that question also does not arise for consideration by us. On the question of jurisdiction of the AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the interpretation placed on those sections by the courts, and that if really the Legislature wanted to make a departure, it would have amended s. 31 and specified its intention clearly. In the said case, the Supreme Court has clearly laid down that, in an appeal filed by the assessee, the AAC has no power to enhance the assessment by discovering new sources of income not mentioned in the return of the assessee or considered by the ITO in the order appealed against. In CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443, the Supreme Court has again reiterated its view that the power of enhancement of the AAC is restricted by s. 31(3) of the 1922 Act to the sources of income which have been the subject-matter of consideration b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t item to tax. In the case before us, there is no material to indicate that the ITO was aware of the entry in the accounts with regard to the receipt of the various amounts for charity. Even assuming that there were entries in the account books regarding the said sum as contended by the Revenue, still, so long as such sum has not been subjected to the process of assessment by the ITO, the said item cannot be treated as an item to be considered for enhancement by the AAC. Learned counsel for the Revenue then contends that if the item which was not considered by the ITO and which is the subject-matter of the proceedings for enhancement by the AAC, relates to the same source which has been subjected to assessment, then there is no restrictio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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