Law: Income Tax Act, 1961

Section: 251

Section 251 of the Income-tax Act, 1961 - Assistant Commissioner (Appeals) - Powers of - Assessment year 1961-62 - Whether AAC has undoubtedly a discretion vested in him to admit additional evidence in appropriate cases but admission of evidence at instance of an applicant without any ground or explanation would not be exercising discretion properly and in such a case appellate authority would be competent to interfere with discretion exercised by AAC - Held, yes FACTS In respect of certain sum, the ITO treated the same as the assessee's income from undisclosed sources. On appeal, the AAC admitted such fresh evidence submitted by the assessee and accepted the assessee's explanation in that respect. He, therefore, reduced the income from other sources by Rs. 20,000 but directed the ITO to make investigations regarding the sources of the assessee's income and take appropriate action to assess the amount in the relevant year. On appeal, the revenue contended that the AAC had erred in accepting an entirely new explanation regarding the sources of the sum of Rs. 20,000. Such explanation had not been offered to the ITO. The Tribunal accepted the department's contention and held that the AAC had fallen into an error in accepting the story regarding the sale of shares which was made out before him for the first time because the assessee had all through maintained before the ITO that he had enough cash savings, meaning thereby that he had surplus over and above the money that had already been invested in the shares. The Tribunal, therefore, reversed the of the AAC and restored the order of the ITO. HELD The AAC has very wide powers and in the interests of justice he can make further enquiry and he can admit new ground of appeal. He can also give deductions not claimed by the assessee. If without any explanation at all the AAC admits evidence at the invitation of the parties, he would be exercising, a discretion not properly. He has undoubtedly a discretion vested in him to admit additional evidence in appropriate cases but admission of evidence at the instance of an appellant without any ground or explanation would not be exercising discretion properly and in such a…

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