Appellate enhancement requires prior notice and hearing before income can be increased in assessment proceedings.

Appellate powers may extend to examination of parts of an assessment not specifically challenged, as they are co-extensive with those of the Income-tax Officer. However, where an appellate direction can increase the assessee's total income, prior notice and an opportunity of hearing are mandatory before any enhancement is made. The requirement of notice is a condition precedent to a valid appellate order when enhancement is possible. An appellate order passed without such notice is unsustainable and must be reconsidered after giving the assessee a hearing.

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Issues: Whether the Appellate Assistant Commissioner could set aside the assessment and direct recomputation in a manner that could result in enhancement of the assessee's income without first giving notice and an opportunity of hearing.

Analysis: The assessee's objection to the Appellate Assistant Commissioner's power to examine parts of the assessment not specifically challenged was rejected, since appellate powers are co-extensive with those of the Income-tax Officer. However, the direction issued by the Appellate Assistant Commissioner was capable of increasing the assessee's total income, and enhancement cannot be made without prior notice and hearing. Compliance with this requirement is a condition precedent to a valid appellate order where enhancement is possible.

Conclusion: The order of the Appellate Assistant Commissioner was unsustainable for want of notice before the intended enhancement, and the matter was sent back for fresh disposal after giving the assessee an opportunity of being heard.

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