Law:

Section:

Section 251 of the Income-tax Act, 1961 [Corresponding to section 31(3) of the Indian Income-tax Act, 1922] - Commissioner a (Appeals) - Powers of - Whether various powers given to AAC under clauses (a) and (b) of section 31(3) of 1922 Act are in relation to an order of assessment made by ITO and not otherwise - Held, yes FACTS The assessee was carrying on multifarious business activities at various places and in various names. These activities were mainly money-lending, dealings in iron, timber, vegetable ghee, plying of country crafts for transport of goods, running cotton ginning and pressing factory, etc. Besides his income from these business activities, the assessee also derived income from securities and immovable property and used to receive dividends from shares held by him. Besides these concerns run by the assessee in different names, there were other concerns in which the assessee was interested and which appear to have been practically run by him. These were 'C' and 'S'. The 'C' company, was started in or about 1940 and all the one hundred and twenty shares in the company were, until 5-6-1947, held by the assessee, his brother, and one 'R'. These shares were subsequently transferred in the name of the assessee's wife and his son. The other company, i.e., was formed on 1-5-1951, and thirty-four shares which were originally issued were held by the assessee, his wife, his said brother, 'H', and his son, 'J'. While making the assessment of the assessee for the assessment year 1955-56 and in particular, while computing the assessee's income under the heading "business income", the ITO made a detailed examination of the two companies and came to the conclusion that the business carried on by these two companies were really the assessee's business and that the two companies were the assessee's benamidars and on this basis he proceeded to compute the income of 'C' company and added Rs. 25,258 which he assessed as the income from businesses of the assessee. Aggrieved by this inclusion, the assessee filed an appeal before the AAC. During the hearing of that appeal, the ITO conceded that the company and the assessee being distinct entities in law, the…

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