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TMI Blog2024 (11) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... Rai Bahadur Hardutroy Motilal Chamaria [ 1967 (4) TMI 8 - SUPREME COURT] . The Section 31 of the Income Tax Act 1922 and the Section 251 of the Income Tax Act 1961 are exactly identical except the Explanation which is inserted in the Income Tax Act 1961. However, we have already interpreted the effect of the Explanation to section 251. Similarly, we find support from case of Vijay Builders [ 2015 (2) TMI 1122 - ITAT PUNE] wherein the ITAT has followed the Hon ble Supreme Court s decision in the case of CIT vs Shapoorji Pallonji Mistry [ 1962 (2) TMI 12 - SUPREME COURT] In the case under consideration the impugned source of income which was Net Profit shown in the impugned Profit and Loss Account was never before the Assessing Officer. Hence the Assessing Officer had not applied his mind on the Taxability/ non taxability of the impugned Net Profit , hence the Ld.CIT(A) had no jurisdiction to consider the said amount of Net Profit and enhance the income of the Assessee. CIT(A) has erred in directing the AO to tax the impugned Net Profit and erred in enhancing the income of the assessee. Accordingly, the AO is directed to delete the addition which was directed by Ld.CIT(A). In the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade an addition of Rs. 74,16,500/-. However, ld.CIT(A) disallowed the claim of assessee u/sec.80P of the Act and directed the AO to tax the net profit declared by assessee in the Profit and Loss Account of Rs. 10,93,629/-. This act of ld.CIT(A) is nothing but enhancement. No notice has been issued by the ld.CIT(A) before making the enhancement, therefore, the order of ld.CIT(A) is bad in law. 2.1 Ld.AR submitted that section 80A(5) was not applicable for A.Y.2015-16. Hence, ld.CIT(A) erred in invoking section 80A(5) of the Act. 2.2 Ld.AR also submitted that the CIT(A) does not have any power to add a new source of income which has not been considered by the AO. In this case the CIT(A) has considered the Net profit which was never considered by the AO hence CIT(A) does not have jurisdiction to consider it . 2.3 Ld.AR relied on the following decisions: Vijay Builders Vs. ITO 863 /PUN/2013 CIT Vs. Lotte India Corporation Ltd 212 CTR 543(Madras) CIT Vs. Sardari Lal Co 251 ITR 864(Delhi) Submission of ld.DR : 3. The ld.DR relied on the order ld.CIT(A). 4. Findings Analysis : 4.1. We have heard both the parties and perused the records. The assessee is a Co-operative Credit Society engage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irected the AO to assess the Net Profit shown in the Profit and Loss account and Tax it. 4.5 Section 251 of the Income Tax Act 1961 as applicable at the point of time is reproduced here as under : Powers of the Commissioner (Appeals). 251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; (aa) (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case, he may pass such orders in the appeal as he thinks fit. (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation. In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant. 4.6 Thus, the CIT(A) has powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not disclosed either in the returns filed by the assessee or in the assessment order, and therefore. the Appellate Assistant Commissioner cannot travel beyond the subject- matter of the assessment. In other words, the power of enhancement under s. 31 (3) of the Act is restricted to the subject-matter of assessment or the sources of income which have been considered expressly or by clear implication by the Income-tax Officer from the point of view of the taxability of die assessee. It was argued by Mr.Vishwanath Iyer on behalf of the appellant that by applying the principle to the present case, the Appellate Assistant Commissioner had jurisdiction to enhance the quantum of income of the assessee. It was pointed out that the fact of alleged transfer of Rs. 5,85,000 to Forbesganj branch was noted by the Income-tax Officer and also the fact that it did not reach Forbesganj on the same day. So, it was argued that in the appeal the Appellate Assistant Commissioner had jurisdiction to deal with the question of the taxability of the amount of Rs. 5,85,000 and to hold that it was taxable as undisclosed profits in the hands of the assessee. We are unable to accept the argument put forwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned source of income which was Net Profit shown in the impugned Profit and Loss Account was never before the Assessing Officer. Hence the Assessing Officer had not applied his mind on the Taxability/ non taxability of the impugned Net Profit , hence the Ld.CIT(A) had no jurisdiction to consider the said amount of Net Profit and enhance the income of the Assessee. Therefore, respectfully following the decision of Hon ble Supreme Court (supra) we hold that the Ld.CIT(A) has erred in directing the AO to tax the impugned Net Profit and erred in enhancing the income of the assessee. Accordingly, the AO is directed to delete the addition of Rs. 10,93,629/which was directed by Ld.CIT(A). In the result the ground number 1 raised by the Assessee is allowed. 4.11 Since we have allowed Ground No.1 raised by the Assessee, the other grounds of appeal become academic in nature hence dismissed unadjudicated. However, it is a fact that the Ld.CIT(A) had not provided any opportunity to the assessee before making the enhancement of income which is mandatory as per section 251(2) of the Act. However, we are not adjudicating the Additional Ground of appeal raised by the assessee regarding not p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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