Appellate enhancement powers under income tax law cannot extend to taxing a fresh source of income not examined in assessment.

The appellate power to enhance an assessment under section 31 of the Income-tax Act, 1922 was confined to matters within the assessment record and did not authorise the Appellate Assistant Commissioner to tax a fresh source of income not considered by the Income-tax Officer. The Court read the enhancement power in the context of the Act as a whole, noting that escaped income and similar special situations were separately dealt with under other provisions. It held that long-accepted judicial limits on enhancement remained intact, so a new source of income could not be introduced in the assessee's appeal.

---

---

Issues: Whether, in an appeal filed by the assessee, the Appellate Assistant Commissioner could enhance the assessment by bringing to tax a new source of income not considered by the Income-tax Officer.

Analysis: Section 31 of the Income-tax Act empowered the Appellate Assistant Commissioner to confirm, reduce, enhance or annul an assessment, but the width of the power of enhancement had to be read with the scheme of the Act. The Court noted that provisions such as sections 34 and 33B separately dealt with escaped income and other special situations, indicating that new sources of income were intended to be brought to tax through those routes rather than by enlarging the appellate assessment beyond the record before the Income-tax Officer. The long-standing judicial view limiting enhancement to matters considered by the Income-tax Officer had been uniformly accepted and had not been displaced by legislative amendment.

Conclusion: The Appellate Assistant Commissioner could not assess a new source of income not considered by the Income-tax Officer while enhancing the assessment in the assessee's appeal.

Ratio Decidendi: The power to enhance an assessment under section 31 of the Income-tax Act, 1922 extends only to matters within the assessment record and does not authorise the appellate authority to discover and assess a fresh source of income not considered by the Income-tax Officer.

---