Appellate power in income tax assessment extends beyond assessee's grounds, but not to new sources of income.

The Appellate Assistant Commissioner's appellate powers under section 31(3) of the Income-tax Act, 1922 extended to the whole subject-matter of the assessment and were not confined to the assessee's specific grounds. He could confirm, reduce, enhance or annul an assessment, and could also set it aside for fresh assessment where the item had already been considered by the Income-tax Officer, even if it had not been brought to tax. The only recognised limit was that he could not introduce a new source of income not examined at all by the Income-tax Officer. On that basis, remand for reassessment was within jurisdiction.

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Issues: Whether the Appellate Assistant Commissioner, in an appeal by the assessee, could go beyond the grounds raised and set aside the assessment and direct a fresh assessment in relation to an item of income already considered by the Income-tax Officer but not brought to tax.

Analysis: Section 31(3) of the Income-tax Act, 1922 conferred wide powers on the Appellate Assistant Commissioner to confirm, reduce, enhance or annul the assessment, or to set aside the assessment and direct a fresh assessment. Those powers were not confined to the specific objections taken by the assessee, but extended to the whole subject-matter of the assessment. The limitation recognised by authority was that the Appellate Assistant Commissioner could not introduce a new source of income not considered at all by the Income-tax Officer. Where, however, the item had already been examined in the assessment and the officer had merely held it not taxable, the Appellate Assistant Commissioner could take a contrary view and deal with it in appeal. On that footing, the remand for reassessment was within jurisdiction.

Conclusion: The order remanding the matter for reassessment was valid in law, and the question was answered in the affirmative in favour of the Revenue.

Ratio Decidendi: In an assessee's appeal, the Appellate Assistant Commissioner may exercise enhancement and remand powers over any item that formed part of the subject-matter of the assessment, but not over a new source of income not considered by the Income-tax Officer.

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