Court upholds assessment order for unreported income from Pakistan, advises statutory appeal. Appellate authority's broad annulment power clarified.

The court upheld the assessment order under Section 147 of the Income Tax Act, 1961 for Assessment Year 2016-17, finding that income had escaped assessment due to cash and jewellery brought from Pakistan. The petitioner was advised to pursue a statutory appellate remedy under Section 251 of the Act. The court clarified that the appellate authority has the power of annulment, broader than setting aside an order, rejecting the petitioner's counsel's interpretation. The matter was scheduled for the next hearing pending submission of legible copies of annexures.

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Issues involved: Assessment order under Section 147 of the Income Tax Act, 1961 for Assessment Year 2016-17, alleged income escaping assessment due to cash and jewellery brought from Pakistan, statutory appellate remedy under Section 251 of the Act.

The judgment pertains to an assessment order passed under Section 147, read with Section 144 of the Income Tax Act, 1961, for Assessment Year 2016-17. The Assessing Officer (AO) determined that income amounting to Rs.30,85,500/- had escaped assessment. The petitioner, who had moved from Quetta in West Pakistan to India, brought cash totaling approximately Rs.27,50,000/- and jewellery weighing 150 grams. The AO valued the jewellery at Rs.3,85,500/- and added it to the cash brought from Pakistan, resulting in the alleged escaped income amount. The petitioner was advised to consider a statutory appellate remedy under Section 251 of the Act.

The petitioner's counsel contended that the appellate authority would not have the power to set aside the assessment order dated 31.05.2023. The court, however, opined that this interpretation was incorrect. Section 251 of the Act grants the appellate authority the power of annulment, which is broader than merely setting aside an order. The petitioner's counsel was also questioned regarding the process of bringing Indian currency into the country and depositing it in the bank, to which he undertook to provide further information.

In response to the petitioner's representative's request, the court scheduled the matter for the next hearing on 11.09.2023, subject to the petitioner submitting legible copies of the annexures in advance.

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