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TMI Blog1980 (3) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... irst three additions made by the ITO but otherwise upheld the order of the ITO, with regard to the other three additions. The AAC passed an order setting aside the order of the ITO and directed him to re-examine the issue afresh and pass orders. The effect of the order passed by the AAC was to direct the ITO to consider the matter excluding the above three items. The revenue went in appeal to the Appellate Tribunal against the order of the AAC complaining that the AAC erred in setting aside the assessment partially and that order of the AAC is ultra vires of his powers under s. 251 (1)(a) of the Act. It was argued by the revenue before the Appellate Tribunal that the course open to the AAC under s. 251 (1)(a) of the Act was either to allow the appeal or dismiss the appeal but not to tamper with the assessment order passed by the ITO by upholding it partially and setting it aside partially. The revenue's contention was that the order of the AAC granting partial relief amounted to making an order of remand and the making of such an order was not authorised by the provisions of the Act because s. 251(1)(a) of the Act which does not use the word " remand " does not contemplate " reman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of assessment of the ITO without any requirement of its being remitted to the ITO. The argument of the revenue based as it is on an unargued assumption of the principle of inviolability of an assessment order which is the basis of the judgments of the Privy Council in Bennett and White (Calgary) Ltd. v. Municipal Dist. of Sugar City No. 5 [1951] AC 786 at 816 and our Supreme Court in Ram Narain Sons Ltd. v. Asst. CST [1955] 6 STC 627, underlying s. 251(1)(a) of the Act, is clearly not adopted and accepted by s. 251 of the Act itself. The Legislature had provided the AAC with powers not only to confirm and annul the assessment but also with powers to reduce and enhance the assessment. As we have observed above, the power to reduce and the power to enhance involve the power to interfere partially with the assessment order. What is more, the later portion of s. 251(1)(a) giving power to the AAC not only to set aside the assessment but also to refer the case back to the ITO for making a fresh assessment in accordance with his directions clearly approximates the powers of the AAC to those of a remanding authority. In providing for powers to set aside the assessment and to issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e remitting the case to the ITO, the ITO, would once again have to begin from the beginning and go to the end. This time-consuming process might be unobjectionable and even delightful to Alice in her Wonderland, but would hardly serve any purpose in our work-a-day world. In Pulipati Subbarao and Co. v. AAC [1959] 35 ITR 673 (AP), the assessee objected to an order passed by the ITO requiring him to produce his account books on the ground that the order of the AAC setting aside the earlier assessment made by the ITO and directing him to receive duplicate application for registration of the petitioner-firm and to deal with it according to law, did not authorise a de novo assessment. In other words, the assessee's objection was based on the proposition that the ITO was bound to act according to the directions of the AAC. In that case, the petitioner was assessed by the ITO in the first instance refusing to treat the petitioner-firm as a registered firm. It was against this order of the ITO that the firm filed an appeal to the AAC who had set aside the assessment and directed the ITO to receive a duplicate application for registration and to deal with it according to law and assess it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business in sugar and he could not consider any other source of income which he omitted to consider on the earlier occasion and which did not fall to be considered on the orders of the AAC. The High Court Bench held that (p. 473): " Once the order of assessment is set aside it is open to the Incometax Officer to consider the entire matter afresh and neither the order of the Appellate Assistant Commissioner in terms restricts the Income-tax Officer to consider the issue relating to the estimation of the income alone nor there is any warrant for reading such a restriction of the power either under section 251 (1)(a) or under s. 143(3) under which the Income-tax Officer makes a fresh assessment. In fact we doubt very much as to whether the Appellate Assistant Commissioner could restrict the bower of the Income-tax Officer while setting aside the assessment order itself and directing him to make a fresh assessment order. " (Emphasis supplied). It is also observed further that (p. 474): " Once the order of assessment is set aside and the matter comes up for fresh assessment before the Income-tax Officer, we are of opinion that the powers will have to be decided with reference to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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