AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 117
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.... by Ld. CIT(A) without issuing any statutory notice u/s 251(2) of the Act is bad in law. 1(c). That on the facts and in the circumstances of the case, asking assessee to send more information on new sources by letter dated 03.07.2019 can never be equated with issue of show cause notice u/s 251(2). 2. Without prejudice to Ground No. 1 and on the facts and in the circumstances of the case, Ld. CIT(A) has erred in making new addition of Rs.1,41,15,230/- with an impractical and incorrect view that no common costs are attributable to earn income from non-shipping business. 3. That on the facts and in the circumstances of the case, Ld. CIT(A) in directing the AO to apply Rule 8D for making disallowance u/s 14A is bad in law. 2.1. Ld. Counsel for the assessee asserted to primarily contest on the enhancement made by the Ld. CIT(A) by raising three new issues while disposing the appeal filed by the assessee before him in respect of the three disallowances/additions made by the Ld. AO in the course of assessment. 3. Brief facts of the case as culled out from the records are that assessee is the domestic company engaged in the business of operating ships for carriage of goods. Assesse....
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....by the Ld. CIT(A) to explain its case. Countering the submissions made by the assessee, Ld. CIT(A) stated that "in the present case, addition/disallowance in respect of certain issues has been proposed only on the basis of books of account submitted by the assessee as well as tax computation filed during the course of assessment."Ld. CIT(A) then proceeded to deal with the three issues on merit, raised by him in the course of appellate proceedings and enhanced the total income by making addition/disallowance towards the two issues of allocation of common expenses and disallowance under section 14A. No enhancement was done in respect of the third issue in respect of deduction under section 80G. Aggrieved, assessee is in appeal before the Tribunal. 4. Before us, Ld. Counsel for the assessee emphasised on the position of law which does not permit Ld. CIT(A) making an enhancement by bringing new issues as new sources of income which were not dealt with by the Ld. AO in the assessment proceedings. According to him, such an exercise of power by Ld. CIT(A) is arbitrary and not in accordance with the provisions of law contained in section 251 of the Act. Ld. Counsel submitted that the thre....
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....Appeals). Relevant provision of section 251 reads as under: "Power of the Commissioner(Appeals) (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers - (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; (aa).... (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation. - In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant." 6.1. Power of enhancement under section 251(2) of the Act is restricted to the subject matter arising out of assessment proceedings or the source of income which has been considered expressly or by clear implication by the Ld. AO from the point of view of taxability of the assessee. 6.2. In the present case, it is manifest that ld. AO did not consider the issues relating to alloc....
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....se the three new issues for the taxability in the hands of the assessee. These issues raised by the Ld. CIT(A), at best, could have been taken up by invoking the provisions of section 263 or section 147, subject to fulfilment of their respective conditions and requirements. Accordingly, in the present case, Ld. CIT(A) had no jurisdiction to enhance the taxable income of the assessee in respect of the three issues raised by him on which Ld. AO had not applied his mind in the course of assessment. 7.1. This aspect was dealt by Hon'ble High Court of Delhi in the case of CIT vs. Sardari Lal & Co. [2002] 120 Taxman 595 (Del) wherein vide para 8, it held as under: "the inevitable conclusion is that whenever the question of taxability of income from a new source of income is concerned, which had not been considered by the Assessee Officer, the jurisdiction to deal with the same in appropriate cases may be dealt with under section 147/148 and section 263, if requisite conditions are fulfilled. It is inconceivable that in the presence of such specific provisions, a similar power is available to the first appellate authority." 7.2. Also, Hon'ble High Court in the case of Gurinder Mohan S....
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....t, the provisions of Section 147 of the Act can be invoked, subject to the condition stated in the proviso of the said section. In the category of cases falling in category (b), section 251(1)(a) provides the CIT(A) could enhance such an assessment qua the under-assessed sum i.e. where the AO had dealt the issue in the assessment and was the subject matter of appeal. In category falling in (c) & (e), the CIT has been empowered to take an appropriate action under section 263 of the Act In category of cases falling under clause (d) and (f), appropriate action under section 147 of the Act can be taken to tax the income which has escaped assessment or had remained to be taxed. There can be situations where an item has been dealt with in the body of the order of assessment and the assessee being aggrieved from the addition or disallowances so made, had preferred an appeal before the CIT(A) against the said addition and disallowance, the said disallowance and addition being the subject matter of appeal before the CIT(A) in such cases, the CIT(A) has been empowered u/s 251(1)(a) of the Act, to enhance such an income where the Assessing Officer had proceeded to make addition or disallowanc....