TaxTMI 
TaxTMI 
2007 (4) TMI 171
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.... Tax Act, 1961 (for short "the Act"). 2. We have heard learned counsel for the petitioner and with his assistance perused the documents on record. 3. The assessee filed his return of income for the assessment year 2004-05 on May 31, 2004 declaring his income at Rs. 30,856/-, which was processed under Section 143(1) of the Act on December 21, 2004. Later on, the case of the petitioner was taken up for scrutiny and notice under Section 143(2) of the Act was issued to the assessee, who is engaged in the business of manufacture of PVC rings. On perusal of the balance sheet of the company as on March 31, 2004, it was revealed that share capital of the company as on March 31, 2003 was Rs. 1,02,21,800/-, which was increased to Rs. 3,84....
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.... transactions of share application money, as noticed in the order of assessment, had not been verified by the assessing officer. 5. The contention of the learned counsel for the petitioner is that action on the part of the CIT(A) in relying upon the report sent by the assessing officer and to form the same as basis for enhancement of income is totally without jurisdiction. According to him in terms of Section 251 of the Act, it is the Commissioner of Income Tax only who could suo moto exercise this power without there being any extraneous information. The provisions of Section 251 of the Act are extracted below : "251. Powers of the Commissioner (Appeals)- (1) In disposing of an appeal, the Commissioner (Appeals) shall have the follow....
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....in the form of principle of natural justice has been provided. 7. An identical issue was considered by a Division Bench of Kerala High Court in Popular Automobiles v. Commissioner of Income-Tax (1991) 187 ITR 86 wherein it was held as under (page 92) : "It was contended before us that it is open to the Commissioner of Income-tax (Appeals) to enhance the assessment suo motu. The question that was mooted was that the Commissioner of Income-tax (Appeals) was not obliged to do so, on a motion made by the Income-tax Officer in that regard. In other words, it was argued that the power vested in the Commissioner of Income -tax(Appeals), even to enhance an assessment , is a suo motu discretionary power and the Income-tax Officer has no right ....
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.... effect of section 52(2) from adducing evidence of the taxpayer's true income because it would thereby be adducing evidence leading to an increased assessment." Similarly, in Way v. Underdown (H.M. Inspector of Taxes) (1974) 49 TC 215, 231 (CA), in disposing of a petition similar to the one raised herein, Plowman J. stated as follows: "Even if it is right that the Inspector can only give reasons in support of the assessment and is not entitled to argue that it should be increased, the Commissioners undoubtedly have power under Section 52(6) to increase assessments, and it may be that the Inspector in the present case was doing no more than reminding the Commissioners what their jurisdiction was." In the light of the above decisions....