“(I) Whether The Appellate Tribunal Was Legally Justifiedin Holding That Cit(A) In Exercise Of Power Ofenhancement U/S 251 Has Power To Consider Newsource Of In v. Sardari Lal & Co. 251 Itr 864 (Del) (Fb)?

[1] AFR Reserved on 21.08.2019 Delivered on 03.09.2019 -Court No. 35Case :- INCOME TAX APPEAL No. - 159 of 2016Appellant :- M/S S.D. TradersRespondent :- Commissioner Of Income Tax And Anr.Counsel for Appellant :- Suyash AgarwalCounsel for Respondent :- C.S.C. I.T.,Krishna Agarawal,Pravin Kumar Hon'ble Bharati Sapru,J.Hon'ble Rohit Ranjan Agarwal,J. (Delivered by Hon'ble Rohit Ranjan Agarwal,J.) 1.This is an assessee's appeal under Section 260-A of theIncome Tax Act, 1961 (hereinafter called as 'Act') assailing theorder of the Income Tax Appellate Tribunal, Lucknow Bench,'A' Lucknow (hereinafter called as 'Tribunal') dated 24.02.2016,affirming the order of the CIT (A) as far as regarding additionout of sundry creditors to the extent of Rs.15 lacs anddisallowance of 25% of the labour charges. The appeal wasadmitted on 05.07.2016 on the following question of law:- “(i) Whether the Appellate Tribunal was legally justifiedin holding that CIT(A) in exercise of power ofenhancement u/s 251 has power to consider newsource of income which was not dealt by A.O. inassessment order ignoring the Full Bench decision ofCIT vs. Sardari Lal & Co. 251 ITR 864 (Del) (FB)? (v) Whether the Appellate Tribunal was justified in notconsidering that after set-aside proceedings by Hon'blehigh Court, the CIT(A) has not issued fresh notice ofenhancement (although time barred) and followed theits earlier order without application of mind?” the application filed by the appellant for additional question oflaw proposed by him which are as under:- “(iii) whether the ITAT was correct to disallow Rs.5.95lacs, being 25% of labour charges ignoring theincreasing trend in the G.P rate of 17.79% in this yearas compared to 13.79% in A.y 2005-06, specially whenall the expenses were vouched and verifiable beingthe books of accounts are duly audited u/s 44AB of theAct, in the absence of its rejection and the books havenot been rejected. (iv) whether the ITAT has rightly sustained the additionof Rs.15 lacs out of Sundry Creditors for onus ofdischarge of verification after 7 years, on appellantwhile legal observation to preserve the books ofAccounts and other documents, for 6 years from therelevant assessment years and third party is under noobligation to provide confirmation or verificationbeyond 6 years from the relevant assessment years.” 3.On 03.05.2019, the above mentioned question of lawswere incorporated by the appellant in the paper-book asquestion nos. III and IV. Assessee/ appellant is in business ofcivil contract, and for assessment year 2006-07 disclosed hisjob work receipts amounting to Rs.90,35,009/- and declaredgross profit of Rs.16,07,474/- whereas net profit was shown asRs.3,62,113/-. Return of income was filed on 31.10.2006 andthe same was processed under Section 143(1) of the Act on14.09.2007. Case of the assessee was selected for scrutinyand notice under Section 143(2) was issued on 19.10.2007, aswell as notice under Section 142(1) along with questionnairewas issued on 08.08.2008. According to assessee, he repliedthe queries raised by Assessing Officer. AO completedassessment and made three additions. 4.The order of assessment was challenged by assessee before Commissioner of Income Tax (Appeals), who on13.09.2013 issued notice requiring appellant to produce labourregister including bills, vouchers and ledger accountsas wellas details of sundry creditors. On 14.11.2013, CIT (A) passedan order enhancing income of appellant by Rs.26.50 lacswhich includes disallowances to the extent of 50% of wageexpenses claimed by appellant in profit and loss account and50% of sundry creditors appearing in balance sheet of theassessee. 4.The order of assessment was challenged by assessee before Commissioner of Income Tax (Appeals), who on13.09.2013 issued notice requiring appellant to produce labourregister including bills, vouchers and ledger accountsas wellas details of sundry creditors. On 14.11.2013, CIT (A) passedan order enhancing income of appellant by Rs.26.50 lacswhich includes disallowances to the extent of 50% of wageexpenses claimed by appellant in profit and loss account and50% of sundry creditors appearing in balance sheet of theassessee. 5.Order of CIT(A) was challenged before the Tribunal byassessee, and on 14.04.2014, Tribunal dismissed the appealof assessee. Aggrieved by this order assessee preferred anIncome Tax Appeal Defective No. 145 of 2014 before thisCourt. On 10.12.2014, this Court set aside the order of CIT (A)and of the Tribunal, and restored the proceedings forreconsideration before CIT (A), with a direction that appellantshall file all required information and documentary materialbefore CIT (A) by 31[st] December, 2014 and shall appearbefore CIT (A) for receiving directions as to hearing on 5[th]January, 2015. It was further held that in case assessee fails tofile required information and documentary material, CIT (A)would be at liberty to pass orders on basis of available recordsafter furnishing an opportunity of being heard to theassessee. 6.In compliance of the order of this Court, it appears thatassessee filed an application along with copy of order beforeCIT (A) along with certain documents which have beenenclosed along with this appeal and are part of record as Annexure-6. Further, notice under Section 250 was issued bythe CIT (A) for hearing on 05.01.2015. Thereafter, appellantwas given several opportunities on 31.12.2014, 18.02.2015,27.02.2015, 09.03.2015, 17.03.2015 and 25.03.2015. Fromthe order of the CIT (A), it appears that the authorisedrepresentative of the appellant appeared from time to time andfurnished replies/ documents. On 31.03.2015, CIT (A) partlyallowed appeal of the assessee and disallowance ofRs.36,019/- and Rs.20,000/- were deleted, while additions ofRs.11.50 lacs and Rs.15.00 lacs were confirmed. Against thisorder an appeal was filed by the assessee/ appellant beforethe Tribunal which was also partly allowed on 24.02.2016confirming the addition of amount of sundry creditors to extentof Rs.15.00 lacs, while disallowance on labour charges ofRs.5.95 lacs being made. It is against this order that thepresent appeal has been filed by the assessee. 7.Learned senior counsel appearing for the assesseesubmitted that Assessing Officer had made three additionswhich were deleted by the CIT (A) but had wrongly madeaddition of Rs.11.50 lacs and Rs.15.00 lacs towards labourexpenditure and sundry creditors, as he did not had thejurisdiction to introduce a new source of income andassessment was to be confined to those items of incomewhich was subject matter of original assessment, that is thethree additions made by AO of Rs.76,019/-, Rs.20,000/- andRs.54,375/- only. 8.It was submitted that Section 251(1)(a) of the Act onlyenvisages for the appellate authority that is CIT (Appeal) to confine its assessment to the original assessment order andnot to include the power to discover a new source of income.Reliance has been placed upon the decision in case of CIT v.Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC). Relevantportion relied upon is extracted hereasunder:- 8.It was submitted that Section 251(1)(a) of the Act onlyenvisages for the appellate authority that is CIT (Appeal) to confine its assessment to the original assessment order andnot to include the power to discover a new source of income.Reliance has been placed upon the decision in case of CIT v.Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC). Relevantportion relied upon is extracted hereasunder:- “In our opinion, this Court must be held not to haveexpressed its final opinion on the point arising here, inview of what was stated at pages 709 and 710 of thereport. This Court, however, gave approval to theopinion of the learned Chief Justice of the BombayHigh Court that section 31 of the Income-tax Actconfers not only appellate powers upon the AppellateAssistant Commissioner in so far as he is moved by anassessee but also a revisional jurisdiction to revise theassessment with a power to enhance the assessment.So much, of course, follows from the language of thesection itself. The only question is whether inenhancing the assessment for any year he can traveloutside the record that is to say, the return made by theassessee and the assessment order passed by theIncome-tax Officer with a view to finding out newsources of income not disclosed in either. It iscontended by the Commissioner of Income-tax that theword "'assessment" here means the ultimate amountwhich an assessee must pay, regard being had to thecharging section and his total income. In this view, it issaid that the words "enhance the assessments” are notconfined to the assessment reached through aparticular process but the amount which ought to havebeen computed if the true total income had beenfound. There is no doubt that this view is also possible.On the other hand, it must not be overlooked that thereare other provisions like sections 34 and 33B, whichenable escaped income from new sources to bebrought to tax after following a special procedure. Theassessee contends that the powers of the AppellateAssistant Commissioner extend to matters consideredby the Income-tax Officer, and if a new source is to beconsidered, then the power of remand should beexercised. By the exercise of the power to assess freshsources of income, the assessee is deprived of afinding by two tribunals and one right of appeal.” the Apex Court in case of ITO v. Rai Bahadur HardutroyMotilal Chamaria [1967] 66 ITR 443 (SC) which had followedthe earlier decision of the Apex Court cited above. Reliancehas also been placed on the decision of the Supreme Court incase of Additional Commissioner of Income Tax v. M/s.Gurjargravures (P.) Ltd. [1978] 111 ITR 1 (SC), following theearlier two decisions of the Apex Court. Counsel for theassessee vehemently argued that the power of the firstappellate authority does not go beyond what has beenconsidered by the Assessing Officer in appeal and relianceupon the decision of a Full Bench in case of CIT v. Sardari Lal and Co. [2001] 251 ITR 864 (Delhi) has been placed wherein it has been held as under:- the Apex Court in case of ITO v. Rai Bahadur HardutroyMotilal Chamaria [1967] 66 ITR 443 (SC) which had followedthe earlier decision of the Apex Court cited above. Reliancehas also been placed on the decision of the Supreme Court incase of Additional Commissioner of Income Tax v. M/s.Gurjargravures (P.) Ltd. [1978] 111 ITR 1 (SC), following theearlier two decisions of the Apex Court. Counsel for theassessee vehemently argued that the power of the firstappellate authority does not go beyond what has beenconsidered by the Assessing Officer in appeal and relianceupon the decision of a Full Bench in case of CIT v. Sardari Lal and Co. [2001] 251 ITR 864 (Delhi) has been placed wherein it has been held as under:- “7. The learned counsel for the revenue also submittedthat this conclusion of the Division Bench needs afresh look. We have considered this submission in thebackground of what had been stated by the ApexCourt in Jute Corporation of India Ltd. v. CIT [1991]187 ITR 688 and CIT v. Nirbheram Daluram [1997]224 ITR 610. In Jute Corporation of India Ltd.'s case(supra), the Apex Court while considering the questionwhether AAC has jurisdiction to allow the assessee toraise an additional ground in assailing the order ofassessment before it, referred to Shapoorji PallonjiMistry's case (supra), and draw a distinction betweenthe power to enhance tax on discovery of a newsource of income and granting a deduction on theadmitted facts supported by the decision of the ApexCourt. Relying on certain observations made by theApex Court in CIT v. Kanpur Coal Syndicate [1964]53 ITR 225, the Apex Court held that powers of thefirst appellate authority are coterminous with those ofthe Assessing Officer and the first appellate authority isvested with all the wide powers, which the subordinateauthority may have in the matter. In NirbheramDaluram's case (supra), the decisions of Kanpur CoalSyndicate's case (supra) and Jute Corporation ofIndia Ltd.'s case (supra) were also considered and itwas observed by the Apex Court that the appellate powers conferred on the first appellate authority undersection 251 were not confined to the matter, which hadbeen considered by the ITO, as the first appellateauthority is vested with all the wide powers of theAssessing Officer may have while making theassessment, but the issue whether these wide powersalso include the power to discover a new source ofincome was not commented upon. Consequently, theview expressed in Shapoorji Pallonji Mistry's case(supra) andRai Bahadur Hardutroy MotilalChamaria's case (supra) still holds feet. It may benoted that the issue was considered in CIT v. Mc.Millan and Co. [1958] 33 ITR 183 (SC). Referring to adecision of the Bombay High Court in NarrondasManordass v. CIT [1957] 31 ITR 909, it was held thatthe language used in section 31 is wide enough toenable the first appellate authority to correct the ITOnot only with regard to a matter which has been raisedby the assessee but also with regard to a matter whichhas been considered by the Assessing Officer anddetermined in the course of assessment. It is alsorelevant to note that in the Jute Corporation'of IndiaLtd.'s case (supra), the Apex Court inter alia observedas follows:- "…..The AAC, on an appeal preferred by theassessee, had jurisdiction to invoke, for the firsttime, the provisions of rule 33 of the IndianIncome-tax Rules, 1922, for the purpose ofcomputing the income of a non-resident even ifthe ITO had not done so in the assessmentproceedings. But, in Shapoorji Pallonji Mistri[1962] 44 ITR 891, this Court, while consideringthe extent of the power of the AAC, referred to anumber of cases decided by various High Courtsincluding the Bombay High Court judgment inNarrondas Manordass [1957] 31 ITR 909 andalso the decision of this Court in McMillan andCo. [1958] 33 ITR 182 and held that, in anappeal filed by the assessee, the AAC has nopower to enhance the assessment bydiscovering new sources of income notconsidered by the ITO in the order appealedagainst. It was urged on behalf of the revenuethat the words 'enhance the assessment'occurring, in section 31 were not confined to theassessment reached through a particularprocess but the amount which ought to havebeen computed if the true total income had beenfound. The Court observed that there was no INCOME TAX APPEAL No. - 159 of 2016 doubt that this view was also possible, buthaving regard to the provisions of sections 34and 33-B, which made provision for assessmentof escaped income from new sources, theinterpretation suggested on behalf of therevenue would be against the view which hadheld the field for nearly 37 years......" (p. 692)[Emphasis supplied] 8. Looking from the aforesaid angles, the inevitableconclusion is that whenever the question of taxabilityof income from a new source of income is concerned,which had not been considered by the AssessingOfficer, the jurisdiction to deal with the same inappropriate cases may be dealt with under sections147/148 of the Act and section 263, if requisiteconditions are fulfilled. It is inconceivable that in thepresence of such specific provisions, a similar power isavailable to the first appellate authority. That being theposition, decision in CIT v. Union Tyres [1999] 240ITR 556 of this Court expresses the correct view anddoes not need re-consideration. This reference isaccordingly disposed of.” 10.Counsel for the assessee also relied on a decision of theKerala High Court in case of Commissioner of Income Tax,.Thrissur v. B.P. Sherafudin [2017] 399 ITR 524 (Kerala)Lastly, he submitted that the CIT (A) had issued the notice forenhancement on 13.09.2013, while the time limit expired on31.03.2013 for assessment year 2006-07 and the saidproceedings are barred by limitation in view of Section 149(1)(b) of the Act. 11.Refuting the arguments made by counsel for assessee,Sri Krishna Agarwal, learned counsel appearing for theRevenue submitted that question nos. (i) and (ii) aresubstantial question of law while question nos. (iii) and (iv)framed as additional questions are questions of fact. Hesubmitted that power of enhancement provided under Section251 of the Act, is in fact, the power of Appellate Assistant Commissioner coterminous with that of Income Tax Officer andhe can do what the Income Tax Officer do and also direct himto do what he has failed to do. It was further contended thatCIT (A) had been empowered under Section 251 to enhancethe assessment and he may consider and decide any matterarising out of proceedings in which the order appealed againstwas passed. Power of CIT(A) cannot be limited to anydisallowances or additions made by Assessing Officer but itextends to whole of proceedings. 12.He further submitted that assessee filed its return ofincome along with balance-sheet, profit and loss account andaudited books of account in the assessment proceedings, inwhich he claimed deduction on account of labour expensesand sundry creditors. CIT (A) has power to look into suchdeductions claimed by assessee in his return as well as anycredits in its books of account which assessee does not claimto be its income. 12.He further submitted that assessee filed its return ofincome along with balance-sheet, profit and loss account andaudited books of account in the assessment proceedings, inwhich he claimed deduction on account of labour expensesand sundry creditors. CIT (A) has power to look into suchdeductions claimed by assessee in his return as well as anycredits in its books of account which assessee does not claimto be its income. 13.Reliance has been placed upon the decision of the ApexCourt in case of Commissioner of Income Tax vs.Nirbheram Deluram [1997] 91 Taxman 181 (SC), CIT vs.Kanpur Coal Syndicate [1964] 53 ITR 225 (SC) as well asJute Corporation of India vs. CIT [1991] 187 ITR 688 (SC),in which the Apex Court in depth considered the power of theAppellate Assistant Commissioner while exercising powerunder Section 251 of the Income Tax Act. Further, the ApexCourt in Jute Corporation of India (supra) distinguished thejudgment passed in case of Gurjargravures (P.) Ltd. (supra)and held as under:- “4. Section 31 of the Income-tax Act, 1922 ('the Act')also conferred power on the AAC to hear appealagainst the assessment order made by the ITO.Chagla, C. J. of the Bombay High Court considered thequestion in detail in Narrondas Manordass v. CIT,[1957] 31 ITR 909 and held that the AAC wasempowered to correct the ITO not only with regard to amatter which had been raised by the assessee but alsowith regard to a matter which may have beenconsidered by the ITO and determined in the course ofthe assessment. The High Court observed that sincethe AAC had been the revising authority against thedecisions of the ITO; a revising authority not in thenarrow sense of revising those matters, which theassessee makes a grievance but the subject-matter ofthe appeal not only he had the same powers whichcould be exercised by the ITO. These observationswere approved by this Court in CIT v. McMillan andCo., [1958] 33 ITR 182 the AAC on an appealpreferred by the assessee had jurisdiction to invoke,for the first time provisions of rule 33 of the Income-taxRules, 1922, for the purpose of computing the incomeof a nonresident even if the ITO had not done so in theassessment proceedings. But in CIT v. ShapporjiPallonji Mistry, [1962] 44 ITR 891 this Court whileconsidering the extent of the power of the AACreferred to a number of cases decided by various HighCourts including Bombay High Court judgment inNarrondas Manordass's case (supra) and also thedecision of this Court in McMillan and Co.'s case(supra) and held that in an appeal filed by theassessee, the AAC has no power to enhance theassessment by discovering new sources of income,not considered by the ITO in the order appealedagainst. It was urged on behalf of the revenue that thewords 'enhance the assessment' occurring in section31 were not confined to the assessment reachedthrough particular process but the amount which oughtto have been computed if the true total income hadbeen found. The Court observed that there was nodoubt that this view was also possible, but havingregard to the provisions of sections 34 and 33B of the1922 Act, which made provisions for assessment ofescaped income from new sources, the interpretationsuggested on behalf of the revenue would be againstthe view which had held the field for nearly 37 years. Inthis view the Court held that the AAC had no power toenhance the assessment by discovering new sourcesof income. This decision does not directly deal with thequestion which we are concerned. Power to enhance tax on discovery of new source of income is quitedifferent than granting deduction on the admitted factsfully supported by the decision of this Court. If the taxliability of the assessee is admitted and if the ITO isafforded opportunity of hearing by the appellateauthority in allowing the assessee's claim for deductionon the settled view of law, there appears to be no goodreason to curtail the powers of the appellate authority'under section 251(1)(a) of the Act. 6. In Gurjargravures (P.) Ltd.'s case (supra) thisCourt has taken a different view, holding that in theabsence of any claim made by the assessee beforethe ITO regarding relief, he is not entitled to raise thequestion of exemption under Section 84 of the Actbefore the AAC hearing appeal against the order of theITO. In that case the assessee had made no claimbefore the ITO for exemption under Section 84, nosuch claim was made in the return nor any materialwas placed on record supporting such a claim beforethe ITO at the time of assessment. The assessee forthe first time made claim for exemption under Section84 before the AAC who rejected the claim but onfurther appeal the Tribunal held that since the entireassessment was open before the AAC there was noreason for his not entertaining the claim, or directingthe ITO to allow appropriate relief. On a reference theHigh Court upheld that view taken by the Tribunal. Onappeal this Court set aside the order of the High Courtas it was of the view that the AAC had no power tointerfere with the order of assessment made by theITO on a new ground not raised before the ITO, and,therefore, the Tribunal committed error in directing theAAC to allow the claim of the assessee under Section84. Apparently this view taken by two Judge Bench ofthis Court appears to be in conflict with the view takenby the three Judge Bench of the Court in Kanpur CoalSyndicate's case (supra). It appears from the report orof the decision in Gujrat High Court case the threeJudge Bench decision in Kanpur Coal Syndicate'scase (supra) was not brought to the notice of theBench in Gurjargravures (P.) Ltd.'s case (supra). Inthe circumstances the view of the larger Bench in theKanpur Coal Syndicate's case (supra) hold the field.However, we do not consider it necessary to over-rulethe view taken in Gurjargravures (P.) Ltd.'s case(supra) as in our opinion that decision is founded onthe special facts of the case, as would appear from thefollowing observations made by the Court:- “…...As we have pointed out earlier, thestatement of case drawn up by the Tribunal doesnot mention that there was any material onrecord to sustain the claim for exemption whichwas made for the first time before the AAC. Weare not here called upon to consider a casewhere the assessee failed to make a claimthough there was no evidence on record tosupport it, or a case where a claim was madebut no evidence or insufficient evidence wasadduced in support. In the present case, neitherany claim was made before the Income-taxOfficer, nor was there any material on recordsupporting such a claim...”(p.5) “…...As we have pointed out earlier, thestatement of case drawn up by the Tribunal doesnot mention that there was any material onrecord to sustain the claim for exemption whichwas made for the first time before the AAC. Weare not here called upon to consider a casewhere the assessee failed to make a claimthough there was no evidence on record tosupport it, or a case where a claim was madebut no evidence or insufficient evidence wasadduced in support. In the present case, neitherany claim was made before the Income-taxOfficer, nor was there any material on recordsupporting such a claim...”(p.5) The above observations do not rule out a case forraising an additional ground before the AAC if theground so raised could not have been raised at thatparticular stage when the return was filed or when theassessment order was made or that the groundbecame available on account of change ofcircumstances or law. There may be several factorsjustifying raising of such new plea in appeal, and eachcase has to be considered on its own facts. If the AACis satisfied he would be acting within his jurisdiction inconsidering the question so raised in all its aspects. Ofcourse, while permitting the assessee to raise anadditional ground, the AAC should exercise hisdiscretion in accordance with law and reason. Hemust be satisfied that the ground raised was bona fideand that the same could not have been raised for goodreasons. The satisfaction of the AAC depends uponthe facts and circumstances of each case and no rigidprinciples or any hard and fast rule can be laid downfor this purpose.” 14.A division Bench of this Court in case of Commissionerof Income Tax v. Kashi Nath Candiwala [2005] 144 Taxman840 (All.) relying upon the judgment of Nirbheram Deluram(supra) and Jute Corporation of India (supra) held that inview of Explanation to Section 251 of the Act the appellateauthority is empowered to consider and decide any matterarising out of proceedings in which the order appealed againstwas passed. “7. We have heard Sri A.N. Mahajan, learned standingcounsel for the revenue and nobody has appeared onbehalf of the respondent-assessee. The learnedcounsel for the Revenue submitted that under theExplanation to section 251 of the Act, the AppellateAuthority is empowered to consider and decide anymatter arising out of proceedings in which the orderappealed against was passed notwithstanding the factthat such matter was not raised before him by theappellant and therefore, even though the tradingresults were not subject-matter of the appeal beforethe Commissioner of Income Tax (Appeals), he wasjustified in going into the trading results andsubstituting it by his own findings. Shri Mahajan hasrelied upon a decision of Apex Court in the case of CITv. Nirbheram Daluram [1997] 224 ITR 610 wherein theApex Court has held that the Appellate AssistantCommissioner is entitled to direct additions in respectof items of income not considered by the Income TaxOfficer. The Apex Court has followed its earlierdecision in the case of Jute Corpn. of India Ltd. v. CIT[1991] 187 ITR 688 and has held that the power of theAppellate Assistant Commissioner is coterminous withthat of the Income Tax Officer and he can do what theIncome Tax Officer can do and also direct him to dowhat he has failed to do.” 15.Further two decisions relied upon by the counsel for theRevenue are in case of CIT v. K.S. Dattatreya [2011] 197Taxman 151 (Kar.) and CIT v. McMillan & Co. [1958] 33 ITR182 (SC). 16.Sri Agarwal submitted that the reliance placed on thedecision of Shapoorji Pallonji Mistry (supra) and RaiBahadur Hardutroy Motilal Chamaria (supra) are completelydistinguishable on facts, as in both cases the Court held thatthe AAC could not travel outsidethe record that is to say thereturn made by assessee with a view to finding out new sourceof income not disclosed. 17.Lastly the counsel for the Revenue submitted that there [14] 15.Further two decisions relied upon by the counsel for theRevenue are in case of CIT v. K.S. Dattatreya [2011] 197Taxman 151 (Kar.) and CIT v. McMillan & Co. [1958] 33 ITR182 (SC). 16.Sri Agarwal submitted that the reliance placed on thedecision of Shapoorji Pallonji Mistry (supra) and RaiBahadur Hardutroy Motilal Chamaria (supra) are completelydistinguishable on facts, as in both cases the Court held thatthe AAC could not travel outsidethe record that is to say thereturn made by assessee with a view to finding out new sourceof income not disclosed. 17.Lastly the counsel for the Revenue submitted that there [14] INCOME TAX APPEAL No. - 159 of 2016 was no requirement of issuance of fresh notice ofenhancement once this Court restored the matter back to theCIT (A) to consider the material, giving an opportunity toassessee and fixing 31[st] December, 2014 as last date forsubmission of documents/ material and several opportunitiesbeing provided by the first appellate authority thus, question offresh issuance of notice does not arise. 18.We have heard Sri Rakesh Ranjan Agarwal, learnedSenior Advocate assisted by Sri Suyash Agarwal, learnedcounsel for the assessee and Sri Krishna Agarwal, learnedcousel for the Revenue. 19.Before proceeding, a glance of provisions of Section 251of the Act is necessary, which is extracted hereasunder:- “251. (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 theassessment; (aa) in an appeal against the order ofassessment in respect of which the proceedingbefore the Settlement Commission abates undersection 245HA, he may, after taking intoconsideration all the material and otherinformation produced by the assessee before, orthe results of the inquiry held or evidencerecorded by, the Settlement Commission, in thecourse of the proceeding before it and suchother material as may be brought on his record,confirm, reduce, enhance or annul theassessment; (b) in an appeal against an order imposing apenalty, he may confirm or cancel such order orvary it so as either to enhance or to reduce thepenalty; (c) in any other case, he may pass such ordersin the appeal as he thinks fit. (2) The Commissioner (Appeals) shall not enhance anassessment or a penalty or reduce the amount ofrefund unless the appellant has had a reasonableopportunity of showing cause against suchenhancement or reduction. Explanation.—In disposing of an appeal, theCommissioner (Appeals) may consider and decide anymatter arising out of the proceedings in which theorder appealed against was passed, notwithstandingthat such matter was not raised before theCommissioner (Appeals) by the appellant.” 20.A careful reading of Section 251 reveals that power vestin Commissioner (Appeals), in an appeal against anassessment order, where he can confirm, reduce enhance orannul the assessment. Explanation to Section 251 furtherclarifies the position and empowers Commissioner (Appeals)to consider and decide any matter arising out of proceedings inwhich the order appealed against was passed, notwithstandingthat said matter was not raised before him by the appellant,meaning thereby that power exercisable by CIT (Appeal) underSection 251 cannot be restricted to only the issues raised bythe appellant in any appeal before him, but Commissioner canexercise his discretion in accordance with law. 20.A careful reading of Section 251 reveals that power vestin Commissioner (Appeals), in an appeal against anassessment order, where he can confirm, reduce enhance orannul the assessment. Explanation to Section 251 furtherclarifies the position and empowers Commissioner (Appeals)to consider and decide any matter arising out of proceedings inwhich the order appealed against was passed, notwithstandingthat said matter was not raised before him by the appellant,meaning thereby that power exercisable by CIT (Appeal) underSection 251 cannot be restricted to only the issues raised bythe appellant in any appeal before him, but Commissioner canexercise his discretion in accordance with law. 21.The first argument raised by the counsel for the assesseethat the CIT (A) while exercising power of enhancement underSection 251 of the Act cannot consider new source of incomewhich was not dealt by the Assessing Officer, in the presentcase cannot be accepted as after the remand by this Court,the CIT (A) as well as the Tribunal in depth had recorded afinding that there was no new source of income on which theadditions had been made and it was all on the recordsproduced before the Assessing Officer that the CIT (A) hadmade additions of labour charges as well as addition of sundry creditors to the extent of Rs.15.00 lacs. 22.It has been argued by the counsel for the Revenue thatCIT (A) has not travelled beyond the books of accounts andduring appeal it was found that only confirmation was availableof five parties and the rest of the creditors were untraceable,hence the addition of the amount was made which were part ofthe books of account. Likewise, the addition made as far asthe labour charges are concerned was also on the basis of thebooks of account submitted by the assessee as such, it cannotbe accepted that the CIT (A) had made additions on the basisof new source of income. 23.The argument of the counsel for the assessee relyingupon the decision of the Apex Court in case of ShapoorjiPallonji Mistry (supra), Rai Bahadur Hardutroy MotilalChamaria (supra) and Sardari Lal & Co. (supra) cannot beaccepted as the said judgments have their very basis wherethe Appellate Assistant Commissioner had made addition ordeletion on the basis of new source of income, but presentcase is not of new source of income, as CIT (A) has reliedupon the books of accounts submitted by the assessee alongwith his return and had claimed expenditure made by him inprofit and loss account and claim of sundry creditors shown inbalance-sheet. 24.The Apex Court while dealing with the power of theAppellate Assistant Commissioner under Section 251 of theAct had in case of Nirbheram Deluram (supra) and JuteCorporation of India (supra) had held that power of Appellate Assistant Commissioner is coterminous with that of IncomeTax Officer and he can do what the Income Tax Officer can doand also direct him to do what he has failed to do. 25.In the present case, the CIT (A) had deleted additionmade by the Assessing Officer and had made two additions ofthe labour charges and sundry creditors on the basis of theprofit and loss account, and balance-sheet filed by theassessee along with his return. Thus, there was no newsource of income as claimed by the assessee. The case lawrelied upon by the assessee in case of Sardari Lal & Co.(supra) and Shapoorji Pallonji Mistry (supra) are alldistinguishable in the facts of the present case, and theHon'ble Courts in those cases had only dealt with the situationwherein AAC found new source of income and made additionsto the income, while in the present case no such addition wasmade from any new source of income but from the return sosubmitted by the assessee himself. 25.In the present case, the CIT (A) had deleted additionmade by the Assessing Officer and had made two additions ofthe labour charges and sundry creditors on the basis of theprofit and loss account, and balance-sheet filed by theassessee along with his return. Thus, there was no newsource of income as claimed by the assessee. The case lawrelied upon by the assessee in case of Sardari Lal & Co.(supra) and Shapoorji Pallonji Mistry (supra) are alldistinguishable in the facts of the present case, and theHon'ble Courts in those cases had only dealt with the situationwherein AAC found new source of income and made additionsto the income, while in the present case no such addition wasmade from any new source of income but from the return sosubmitted by the assessee himself. 26.The second question as regards the issuance of freshnotice of enhancement by the CIT (A) is concerned has norelevance, once the order of the Tribunal as well as CIT (A)was set aside by this Court on 10.12.2014 restoring the appealback to CIT (A) for reconsideration and fixing 31[th] December,2014 as last date for the appellant to file all requiredinformation and documentary material and to appear beforeCIT (A) on 05[th] January, 2015. The question of law raised bythe assessee is of no consequence as he, thereafter, had filedthe documents before CIT (A) and had appeared, thus, thequestion of issuance of fresh notice for enhancement does not INCOME TAX APPEAL No. - 159 of 2016 arise and the CIT(A) rightly decided the question so raisedbefore it. 27.As far as question no. (III) and (IV), which the appellanthad incorporated in his appeal with the permission of the Courtare not substantial question of law and are questions of factwhich have been dealt with by, both CIT (A) and the Tribunal indepth and have categorically recorded finding of fact, for whichno interference is required in this appeal. 28.Thus, argument of the counsel for assessee cannot beaccepted so as to restrict the power of Commissioner(Appeals) on the ground of new source of income, as Section251 clearly envisages the power of the appellate authority forconsidering and deciding any material arising out ofproceedings in which order appealed against was passed. Inthe present case, all the materials looked upon by theappellate authority was before the assessing authority, as suchthe Commissioner (Appeals) rightly proceeded to decide thesame as it arose out of the proceedings of assessment. 29.The Apex Court has also affirmed that power ofCommissioner (Appeals) cannot be restricted and in the caseof Jute Corporation of India Ltd. (supra) held that the powerof the Commissioner (Appeals) being coterminous with that ofthe Income Tax Officer, he can do what the Income Tax Officerdo and further the section also empowers him to direct theAssessing Officer to do what he had failed to do. The power ofthe Commissioner is not bridled in any way and the languageof the section is plain and simple. INCOME TAX APPEAL No. - 159 of 2016 30.Having considered the material on record and the lawlaid down by the Apex Court in regard to the power ofCommissioner (Appeals) exercisable under Section 251 of theAct, we are of the considered opinion that the order of theTribunal needs no interference and the appeal of the assesseeis dismissed. 31. The questions of law are, therefore, answered in favourof the Revenue and against the Assessee. Order Date :- 03.09.2019V.S.Singh