Revisional power under section 31(3): remand and enhancement permitted for items forming part of the original assessment.

Section 31(3) authorises the appellate revisional authority to set aside an assessment, direct fresh inquiry and either confirm, reduce or enhance assessment in respect of items that formed part of the original assessment's subject matter. The note clarifies that the revisional power extends to revisiting items which the assessing officer considered (even if found not taxable) but does not permit introducing wholly new sources not considered in the assessment. Applied effect: remand for reassessment and enhancement are valid where the item was part of the original assessment.

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Issues: (i) Whether the Appellate Assistant Commissioner was competent to enhance the assessment by including remittances of Rs. 4 lakhs which were not the subject of the assessee's grounds of appeal; (ii) Whether the Appellate Assistant Commissioner's order remanding the case to the Income-tax Officer for reassessment is valid in law.

Issue (i): Whether the Appellate Assistant Commissioner could enhance the assessment by including the Rs. 4 lakhs remittance not specifically appealed against by the assessee.

Analysis: The statutory text of section 31(3) grants the Appellate Assistant Commissioner power to confirm, reduce, enhance or set aside an assessment and direct fresh inquiry. Judicial authorities interpret the Appellate Assistant Commissioner's jurisdiction as a revising authority limited to the subject-matter of the assessment (i.e., sources or items which were considered in the assessment), not confined to only those points the assessee happens to have appealed. Where an item has been considered by the Income-tax Officer in the assessment process, even if the officer concluded it was not taxable, the Appellate Assistant Commissioner may revisit and alter that conclusion. Authorities cited reflect that the Appellate Assistant Commissioner's enhancement power cannot introduce entirely new sources never considered in the assessment, but it can bring to tax items which were part of the assessment's subject-matter.

Conclusion: The question of whether the Appellate Assistant Commissioner enhanced the assessment by including the Rs. 4 lakhs remittance does not arise on the facts because the Appellate Assistant Commissioner remanded the matter for reassessment; in any event, the Appellate Assistant Commissioner has jurisdiction to deal with items that formed part of the subject-matter of the assessment.

Issue (ii): Whether the Appellate Assistant Commissioner's order remanding the case to the Income-tax Officer for reassessment is valid in law.

Analysis: Section 31(3) expressly empowers the Appellate Assistant Commissioner to set aside an assessment and direct a fresh assessment after such further inquiry as the Income-tax Officer thinks fit or as the Appellate Assistant Commissioner may direct. The statutory scheme contemplates wide revisional powers once an assessee institutes an appeal, permitting the Appellate Assistant Commissioner to correct errors in the assessment process and to order reexamination of items considered by the Income-tax Officer. The factual record shows the remittance of Rs. 4 lakhs was considered by the Income-tax Officer and reported upon in remand reports; consequently remand for reassessment fell squarely within the appellate powers conferred by the statute.

Conclusion: The Appellate Assistant Commissioner's order remanding the case to the Income-tax Officer for reassessment is valid in law; question (ii) is answered in the affirmative.

Final Conclusion: The Appellate Assistant Commissioner acted within the scope of his statutory powers under section 31(3) of the Indian Income-tax Act, 1922 in remanding the assessment for reassessment on matters that were part of the subject-matter of the original assessment; the remand is legally valid.

Ratio Decidendi: Where an item or source was considered in the original assessment, the Appellate Assistant Commissioner, as a revising authority under section 31(3) of the Indian Income-tax Act, 1922, may set aside the assessment and direct reassessment or enhance the assessment in respect of that item even if the assessee's grounds of appeal did not specifically raise that item; the power is confined only against introducing entirely new sources not considered in the assessment.

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