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TMI Blog1980 (2) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether the sum of Rs. 2,30,000 was added by the Appellate Assistant Commissioner on new sources of income or items not considered by the Income-tax Officer from the point of view of assessability ? (3) Whether the Appellate Assistant Commissioner had no jurisdiction or power to enhance the sum of Rs. 2,30,000 under the facts and circumstances in which he has added the same ? " The reference relates to the assessment year 1956-57. The ITO completed the assessment by his order dated 11th March, 1957. During the assessment proceedings for the succeeding year, the ITO noticed certain entries relating to hundi loans which were not genuine and which could be considered as income from undisclosed sources for the assessment year 1956-57. Reass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return filed by the assessee and the assessment order passed by the ITO. In Chamaria's case [1967] 66 ITR 443 (SC), the AAC considered an entry of Rs. 5,85,000 which had not been considered from the point of view of its taxability by the ITO and added the amount as income from undisclosed sources. The Supreme Court held that the power of enhancement under s. 31(3) was restricted to the subject-matter of the assessment or the source of income which had been considered expressly or by clear implication by the ITO from the point of view of taxability and that the AAC had no power to assess a source of income which had not been processed by the ITO and which was not disclosed either in the return filed by the assessee or in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court that the AAC had no power to do so as the ITO had not considered the item from the point of view of its non-taxability. This decision proceeds on the basis that s. 251 of the 1961 Act being similar to s. 31(3) of the 1922 Act must bear the same interpretation. On the principles laid down in the aforesaid cases, it is clear to us that the AAC had no jurisdiction to consider the new entries which were not considered at all by the ITO and to add the amount of Rs. 2,30,000 to the total income of the assessee. The items totalling that amount constituted new sources of income which were not the subject-matter of assessment before the ITO and, therefore, it was not open in appeal to consider these sources and to assess them. The lear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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