Law:

Section:

Section 251(1)(a) of the Income-tax Act, 1961 - Appellate Assistant Commissioner/Commissioner (Appeals) - Powers of - In course of assessment ITO found that a large proportion of total sales of yarn by assessee had been made to two concerns G and M which, in assessee's account books, had surplus deposits (excess of deposits over sales made but in reality these were fictitious concerns and surplus of deposits over sales made) were suppressed profits of assessee - AAC remanded matter to ITO to make further inquiries regarding G and M - In considering the subject on remand, ITO came across another concern S similar in nature to G and M - On basis of ITO's remand report, AAC made enhancement by taking into account assessee's concealed income in relation to three 'benami' concerns G, M and S - Whether enhancement of assessee's income by AAC based upon G and M's accounts were justified and were not made by travelling beyond record - Held, on facts, yes - Whether, however, when AAC enhanced assessee's income based upon S's account, he went beyond record and was not justified - Held, on facts, yes Facts The assessee carried on business in yarn and cloth. In the course of the assessment, the ITO found that a large proportion of the total sales of yarn by the assessee had been made to two concerns G and M, which, in the assessee's account books, had surplus deposits (excess of deposits over sales made) but in reality these were fictitious concerns and the abovesaid surplus deposits were suppressed profits of the assessee. The AAC remanded the matter to the ITO to make further inquiries regarding G and M. The ITO, in the remand report, substantiated his earlier observations regarding G and M. While considering the subject of remand the ITO came across certain transactions in yarn between the assessee and a company S, which he considered to be another benami concern of the assessee and so recommended that the surplus in its account and withdrawals by 'self' cheques should also be treated as the assessee's concealed income. The AAC, acting upon the remand report, enhanced the assessee's income by taking into account the assessee's concealed income in relation to the three…

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