Law: Income Tax Act, 1961

Section: 254

Section 254 of the Income-tax Act, 1961 [Corresponding to Section 33(4) of the Indian Income-tax Act, 1922] - Appellate Tribunal - Powers of - Assessment year 1949-50 - ITO brought cash credits appearing in accounts of assessee firm to tax - Before Tribunal assessee raised a new point and that was since cash credits had allegedly arisen in financial year 1947-48 they could not be assessed in assessment year 1949-50 - Tribunal allowed said point to be raised by assessee and accepted in its favour - Whether it was within jurisdiction of Tribunal to permit assessee to raise question which it sought to raise for first time before it and Tribunal could not be said to be erred in permitting assessee to do so - Held, yes FACTS The assessee firm was carrying on business in cloth. In the assessment of the firm for the assessment year 1949-50, the ITO found cash credits in the accounts of the firm aggregating to Rs. 90,000 in the names of four non-resident persons. All these credit entries appeared in the months of December, 1947, and January, 1948, the earliest being on the 13-12-1947, and the last on the 9-1-1948. The ITO treated it as income of the assessee from an undisclosed source and added the amount to its assessable income. In the appeal to the AAC, the case was remanded and thereafter the explanation offered by the assessee in respect of this amount of Rs. 90,000 was accepted, and its addition to the assessable income was deleted. The department took an appeal to the Tribunal against the order of the AAC. The Tribunal was of the view that the burden was on the assessee to explain the source of the cash credits and the burden had not been properly discharged by the assessee. Before the Tribunal, however, a new point was raised by the assessee which had not been raised either before the ITO or before the AAC, and that was since the credits had arisen in the financial year 1947-48, and since they constituted, according to the view taken by the ITO, income from an undisclosed source, the relevant previous year in respect of that income was the financial year 1947-48 and it, therefore, could only have been taxed in the assessment year 1948-49, and could not be taxed…

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