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Issues: Whether the Appellate Assistant Commissioner, in hearing an appeal for a particular assessment year, could recharacterise cash credits as income from undisclosed sources and shift the additions to a different assessment year beyond the year under appeal.
Analysis: The appellate power under section 31 of the Income-tax Act, 1922 is wide, but it is confined to the assessment year in appeal. The assessment of one year is a separate unit, and an appellate authority cannot travel outside the record of that year or introduce a new source of income not considered by the Income-tax Officer for that year. The authority may correct the legal character of income already examined, but it cannot transfer additions from one assessment year to another or discover in one year an income source properly belonging to a different year. The alteration made by the Appellate Assistant Commissioner, therefore, went beyond the permissible scope of appellate power.
Conclusion: The question was answered in the negative. The Appellate Assistant Commissioner had no competence to alter the finding and shift the cash-credit additions to different assessment years.
Ratio Decidendi: The appellate authority under section 31 of the Income-tax Act, 1922 cannot go beyond the assessment year and record of the appeal to discover a new source of income or transfer additions to another year.
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