Appellate Remand Power: limited remands are permissible and non-liability may be raised on appeal; successors must implement remands.

Appellate authorities may entertain a plea of non-liability even if not raised before the assessing officer; this clarifies that grounds of non-liability can be urged at appeal and the appellate power to admit new grounds is not absolutely fettered. The Appellate Assistant Commissioner is empowered under the appellate provision to order limited remands or further enquiries necessary for disposing of an appeal, provided the enquiry does not usurp statutory remedies. A successor appellate officer must implement a predecessor's valid remand report and cannot refuse execution on jurisdictional grounds; challenges to remand validity lie to the superior tribunal.

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Issues: (i) Whether an assessee may raise the question of non-liability to be assessed at the appellate stage when that contention was not taken before the Income-tax Officer; (ii) Whether the Appellate Assistant Commissioner has power to pass a remand order under section 31(2); (iii) Whether a succeeding Appellate Assistant Commissioner who hears the appeal may ignore or refuse to act upon a remand report made pursuant to a remand order of his predecessor on the ground that the remand was beyond the predecessor's jurisdiction.

Issue (i): Whether an assessee may raise non-liability at the appellate stage though that ground was not taken before the Income-tax Officer.

Analysis: Section 30 provides for appeals against assessments and does not prohibit raising grounds of non-liability before the appellate authority; subsection (2A) of section 31 permits allowing grounds not specified in the grounds of appeal. The statutory scheme distinguishes appeals arising from section 27 proceedings and appeals against the quantum of assessment, but nothing in the provisions places an absolute fetter on raising non-liability at the appellate stage.

Conclusion: The assessee may raise the question of non-liability to be assessed at the appellate stage even if that ground was not taken before the Income-tax Officer; conclusion in favour of the assessee.

Issue (ii): Whether the Appellate Assistant Commissioner has power to pass a remand order under section 31(2).

Analysis: Section 31(2) authorises the Appellate Assistant Commissioner to make or cause further enquiry before disposing of an appeal. Precedents establish that a remand is permissible, subject to limitation that the enquiry must relate to disposing of the appeal and not to usurp the statutory remedy under section 27; remand may include examination of accounts where necessary to test whether the assessing officer's best judgment was properly exercised.

Conclusion: The Appellate Assistant Commissioner has power to pass a remand order under section 31(2); conclusion in favour of the assessee, subject to the limited scope described.

Issue (iii): Whether a succeeding Appellate Assistant Commissioner may ignore or refuse to act upon a remand report made pursuant to a predecessor's remand order on the ground that the remand was beyond the predecessor's jurisdiction.

Analysis: Orders made by an Appellate Assistant Commissioner are not amenable to review by a succeeding Appellate Assistant Commissioner; if the remand order has been made, the successor must carry it into effect and not substitute his own view on the predecessor's jurisdiction. Any challenge to the correctness or validity of the remand order lies to the superior tribunal by appeal, not to the succeeding Appellate Assistant Commissioner hearing the appeal.

Conclusion: The succeeding Appellate Assistant Commissioner may not ignore or refuse to act upon a valid remand report on the ground that the remand was beyond the predecessor's jurisdiction; conclusion in favour of the assessee.

Final Conclusion: The decision establishes that (a) an assessee may raise non-liability at the appellate stage even if not previously advanced before the assessing officer, (b) the Appellate Assistant Commissioner may pass remand orders under section 31(2) within the limits of disposing of the appeal, and (c) a succeeding Appellate Assistant Commissioner must implement a predecessor's remand directions and not refuse to act on the remand report but may leave any challenge to the remand's validity to the superior tribunal.

Ratio Decidendi: Where an appellate remedy is provided, the appellate authority's powers under section 31(2) to order further enquiry include limited remand for purposes of disposing the appeal and do not permit a successor to reopen or nullify a predecessor's remand order; questions as to validity of a remand order must be agitated before the superior tribunal.

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