1997 (3) TMI 2

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....ter referred to as "the assessee") is a partnership firm carrying on business in grains, rice, gunny bags and oil seeds, etc. Under order dated March 11, 1957, assessment was originally made on a total income of Rs. 28,724. On reassessment in proceedings initiated under section 147 of the Act the Income-tax Officer included in the total income a sum of Rs. 2,45,000 referable to ostensible transactions in hundi loans shown by the assessee. The assessee filed an appeal against the said assessment order passed by the Income-tax Officer. The Appellate Assistant Commissioner not only sustained the said addition of Rs. 2,45,000 but he also took notice of 10 other items of ostensible hundi loans amounting to Rs. 2,30,000 and directed that the tota....

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.... amount constituted new sources of income which were not the subject-matter of assessment before the Income-tax Officer and, therefore, it was not open in appeal to consider these sources and to assess them. In taking this view, the High Court has placed reliance on the decision of this court in Addl. CIT v. Gurjargravures Pvt. Ltd. [1978] 111 ITR 1, wherein it was held that the Appellate Assistant Commissioner had no power to grant exemption under section 84 of the Act since the Income-tax Officer did not consider the item from the point of view of its non-taxability. Feeling aggrieved by the said decision of the High Court, the Revenue has filed this appeal. Shri Ranbir Chandra, learned counsel appearing for the Revenue, has submitted ....

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.... the Income-tax Officer can do and also direct him to do what he has failed to do." After referring to these observations, this court in Jute Corporation of India Ltd. [1991] 187 ITR 688 has stated : "The above observations are squarely applicable in the interpretation of section 251(1)(a) of the Act. The declaration of law is clear that the power of the Appellate Assistant Commissioner is coterminous with that of the Income-tax Officer, and if that is so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income-tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exerci....