TaxTMI 
TaxTMI 
1979 (7) TMI 129
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....10,998 under s. 40A(3) of the said Act; and (4) Disallowance of bad debt of Rs. 2000. These are dealt with below. 3. Out of the grounds mentioned above, the addition of Rs. 5000 in the trading account and Rs. 10,998 under s. 40A(3) have not been pressed and hence these are dismissed. 4. Regarding Item No. 1: The assessee firm has its factory at Jamitpura where the books of accounts are maintained. It seems that entries in the books are made on the basis of statements received from Bundi from time to time as prepared by partner Sri Wastiram. The cash book is written not on day-to-day basis but some times transactions are combined for a number of days. On examining the books of account the ITO noticed that in respect of certain am....
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.... from Sri Ved Prakash out of the cash balance of Rs. 4,500 kept with him since Dec., 1973, when the said concern was closed. The ld. AAC, however, did not feel satisfied as there was no evidence that the amount in question remained in tact with Sri Ved Prakash during the period Dec., 1973 to 21st Feb., 1974 when it was deposited with the assessee. Regarding Rs. 20,000 in the name of Nathuram & Co., Jaipur, it appeared from the books of account of the Jaipur party that the said amount was received by the assessee on 10th Aug., 1974. Explaining the circumstances under which the entry was made in the assessee's books on 9th Aug., 1974, it was stated that the said amount was received by partner Sri Kewal Krishan Bhatia through driver Sri Jagann....
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....that it was not within the competence of the ld. AAC to go into these credits and to enhance the income by the said amount of Rs. 24,500. He did not consider it necessary to go into the merits of the addition. The ld. Depttl. Representative, on the other had, supported the order of the ld. AAC stating that the ld. AAC had not travelled beyond the record and that he had merely done what the ITO did while making the assessment, though the items considered by him were different. 7. We have considered the rival submissions. As stated the income of the assessee firm is from manufacture and sale of sugar. In making the assessment, the ITO included a sum of Rs. 25,000 as income from undisclosed source. This addition was made as the ITO noticed ....
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.... any year he can travel outside the record, that is to say, the return made by the assessee and the assessment order passed by the ITO with a view to finding out new source of income, not disclosed in either. It is contended by the CIT that the word 'assessment' here means the ultimate amount which an assessee must pay, regard being had to the charging section and his total income. In this view, it is said that the words, "enhance the assessment" are not confined to the assessment reached which ought to have been computed if the true total income had been found. There is no doubt that this view is also possible. On the other hand, it must not be overlooked that there are other provisions like ss. 34 and 33B, which enable escaped income from....
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....the ITO with a view to find out new sources of income, not disclosed in either. In the present case the AAC exactly did so. The two items of cash credits attracted his notice. These had neither figured in the return of income, nor were these considered by the ITO while making the assessment. These also do not relate to the assessee's business of manufacture and sale of sugar. The ld. AAC has thus considered fresh items and by adding the amount in question as income from other sources, he has virtually found out a new source of income. In view of these facts we cannot agree with the Revenue's view that the ld. AAC did not travel beyond the record or that he did not add any income from a new source. We agree with the ld. counsel for the asses....