Law:

Section:

Section 251 of the Income-tax Act, 1961 [Corresponding to section 31 of the Indian Income-tax Act, 1922] - Commissioner (Appeals) - Powers of - Assessment year 1960-61 - Whether powers of Appellate Assistant Commissioner are not confined to subject-matter of appeal but extended to subject-matter of assessment - Held, yes - Whether Appellate Assistant Commissioner is entitled to sustain addition made by Assessing Officer on different ground from one which has been made by him - Held, yes - Whether, therefore, Appellate Assistant Commissioner was right in sustaining addition as income from undisclosed source even though he came to conclusion that there had been no inflation in purchase price, indulged in by assessee - Held, yes FACTS The ITO found cash credits in the account of one of the partners of the assessee-firm. The peak credit of Rs. 13,189 was found on 10-10-1959. The source of the credits was not satisfactorily explained. Therefore, the ITO held that there was an inflation in the purchase price recorded by the assessee and added a round sum of Rs. 14,000 to the returned income on the ground that it was not properly accounted for. The AAC examined the matter and found as a fact that there was no evidence of inflation in the purchase price. However, he sustained the addition of Rs. 13,189 under the head "Undisclosed sources" as the source of the credits was not satisfactorily explained by the assessee. The assessee contended before the Tribunal that the AAC had no jurisdiction to add a sum of Rs. 13,189 as income under the head "Undisclosed sources" because it constituted a new source of income. This contention of the assessee did not find favour with the Tribunal which dismissed the appeal. On reference : HELD It is now well settled that the AAC, while exercising his powers under section 31(3)(a). is empowered in the case of an order as assessment, to confirm, reduced, enhance or annual the assessment. Under clause (b ) of sub-section (3) to section 31, he may set aside the assessment and direct the ITO to make a fresh assessment. In disposing of the appeal under section 31. his powers are conterminous with those of the ITO. He has, therefore, plenary…

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