9911796707
TMI Blog1983 (2) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... ing for this assessment year, the assessee firm in its return of income surrendered Rs. 1,50,000 for capital outside the account books, which was utilised in the business of manufacture and sale of hosiery goods in which the sales outside the account books, according to the assessee firm, amounted to Rs. 9,02,288. The profit on these sales outside the account books was estimated by the assessee firm according to its return by applying a net profit rate of 3% and in this way the profit from manufacture and sale of hosiery goods outside the account books showed by the assessee in the return was Rs. 27,070. The ITO started with the capital of the partners of the firm and the family members according to the balance sheet of the assessee firm as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haring, that is, 55% and 45% and, therefore, these deposits also could not be taken into consideration for the purpose of explaining the source of capital of the assessee firm. He made some other observations also and finally came to the conclusion that on the issue of unexplained capital of the assessee firm a decision has been arrived at by the ITO without proper examination of all the facts and circumstances and the relevant enquiry in this connection having been made. The CIT(A), therefore, set aside the assessment with the direction to the ITO to make the assessment afresh without any restriction on his powers with the only rider that while completing the assessment afresh, he will keep in mind the observations of the CIT(A) in his ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t April, 1978 and, therefore, what was shown in the balance sheet of the assessee firm as on 31st March, 1978 had no relevance to the capital of Shri Hargun Das in the assessee firm. Our attention was invited to the assessment order in the case of Shri Narain Das for the asst. yr. 1978-79 and Shri Dhawan pointed out that in this case in similar circumstances the assessee's version was accepted with some additions. Shri Dhawan again reiterated that there were two issues only before the CIT(A), firstly, the capital outside the account books and, secondly, the estimate of income from business outside the account books and while dealing with these two issues alone, the competence of the CIT(A) was limited to whether the unexplained investment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal representative Shri Prasad submitted to us that the submissions, which were now made before us, were not before the Commissioner of Income-tax (Appeals) and this was all the more reason justifying the setting aside of the assessment. Shri Prasad referred to the ruling of the Hon'ble Supreme Court in the case of CIT vs. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC) wherein their Lordships laid down that the first appellate authority, that is, the AAC (or the CIT (A) as the case may be) while disposing of an appeal has the same power as are vested in the ITO, that is in other words, he can do what the ITO can do and can also direct the ITO to do what the ITO had failed to do and to a ruling of the Hon'ble High Court of Allahabad in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CIT (A) that the value of the house at 104-A/212, P-Road, Kanpur, could nor form part of the capital of the assessee firm, particularly when the other house at Lajpat Nagar, owned by the other partner Shri Gurmukh Das, was not similarly taken into consideration for explaining the capital of the assessee firm as on 25th October, 1978. However, since the issue under consideration here was to what extent the capital of the assessee firm as on 25th October, 1978 remained unexplained and could consequently be treated as assessee's income from other sources, the CIT(A) himself could have taken a decision on this issue without having sent the matter back to the ITO. While it is true that the CIT(A) has the power of enhancement while disposi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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