Law:

Section:

Section 254 of the Income-tax Act, 1961, read with rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963 - Appellate Tribunal - Powers of - Assessment year 1964-65 - Whether Tribunal was justified in entertaining new contention raised by assessee that past intangible additions made in assessee's case could be taken into account in explaining discrepancy in capital figure treated by Income-tax Officer as income from undisclosed sources - Held, yes Section 69 of the Income-tax Act, 1961 - Unexplained investment - Assessment year 1964-65 - Whether assessee was entitled to take advantage of past intangible additions, made in its income, to explain source of investment treated by Income-tax Officer as income from undisclosed sources - Held, yes FACTS The assessee, a Hindu undivided family, was carrying on business in hardware pipes, etc., with head office at Ladwa and a branch at Yamunanagar : A partial partition of the family was effected on 31-3-1964, whereby the capital of both the shops was pooled together and then divided equally amongst the various members of the family. In the course of assessment proceedings for the assessment year 1964-65, it was found on examination of the account books of the branch that the capital of that branch on 31-3-64, was only Rs. 31,459 whereas according to the partition document the amount pooled from this branch was Rs. 51,463. There was, thus, a discrepancy of Rs. 20,004 for which the explanation of the assessee was not accepted and the amount was included in the assessable income of the assessee as income from undisclosed sources. On appeal, the AAC confirmed the finding of the ITO. On second appeal, the assessee raised a new contention, that is, the difference between the capital at the branch as per its books and the capital transferred to head office at the time of the partial partition represented the intangible additions made to the assessee's income not only in the present assessment year but also in the earlier assessment years. The department objected to the admissibility of his new contention at that stage. The Tribunal, however, held that the contention sought to be raised by the assessee was legal in nature…

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