2004 (12) TMI 21

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....e-tax Act, 1961?" Briefly stated the facts giving rise to the present reference are as follows: The present reference relates to the assessment year 1983-84. The respondent is a firm and derives income from sale of silver ornaments and silver bullion. It had filed the return of income of Rs. 93,960. The Assessing Officer scrutinized the trading account, which disclosed sales of Rs. 27,11,614 with a gross profit of Rs. 2,53,842, which worked out to 9.36 per cent., as against that of the last year of 10.6 per cent, on sales of Rs. 29,83,638. The Income-tax Officer noticed that both the sales and the rate of gross profit had gone down and required the respondent-assessee to explain it. The respondent-assessee explained that the purchase ....

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....mal. His scrutiny of the data produced revealed that the valuation of the closing stock had not properly been made, and, that though the assessee had purchased substantial quantity of old jewellery and got it melted and got new jewellery made out of that which was sold the cost of old jewellery was none the less included in the closing stock as the value of new jewellery which according to the learned Commissioner of Income-tax (Appeals) resulted in a gross undervaluation of closing stock and was not justified. He, therefore, issued a notice of enhancement under section 251(2) of th4 Act to the respondent. The respondent submitted his explanation raising various objections. Amongst other things, it was urged that the assessee did not mai....

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.... order appealed against was passed notwithstanding the fact that such matter was not raised before him by the appellant and therefore, even though the trading results were not the subject-matter of the appeal before the Commissioner of Income-tax (Appeals), he was justified in going into the trading results and substituting it by his own findings. Shri Mahajan has relied upon a decision of the apex court in the case of CIT v. Nirbheram Daluram [1997] 224 ITR 610 wherein the apex court has held that the Appellate Assistant Commissioner is entitled to direct additions in respect of the items of income not considered by the Income-tax Officer. The apex court has followed its earlier decision in the case of Jute Corporation of India Ltd. v. CIT....