LexCOMMISSIONER OF INCOME-TAX, KERALA versus M/S. MANICK SONS
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70Q COMMISSIONER OF INCOME·TAX, KERALA v. MIS. MANICK SONS February 14, 1969 ). C. SH,l\H, V. RAMASWAMI AND A. N. GROVER, JJ.j Income-tax Act, 1922, s. 33-Tribunal's Jowers-Tribunal cannot amalgamate income of two assessment years an divide It equally betwe•n them-Cannot take undertaking from a:rsessee fo file fresh return for earlier year and direct Jncotne~uu Officer to make assessment according- ly-Cannot make <rllowance for 'Intangible additions' without giving reasons. For the asse.sment year 1952-53 the Income-tax Officer added a certain ntnount to the assessec's returned incotnc. as income from undis· closed sources. For the 05'C>.sment year 1953-54 a still larger amount was added on account of unexplained cash credits. The Income-tax Appellate Tribunal when considering the appeal for 1953-54 took the view that since the income assessed in 1952-53 was much less than in earlier years some of the undisclosed income of that year must have gone into the cash credits disclosed in 1953-54, It therefore calculated the income for both the assessment years 1952-53 and 1953-54 together and after making some allowance for 'intangible additions' in each year, determined the amalgamated income for the two years at Rs. 1,00,000 as a round figure. On this basis the assessment for 1953-54 was reduced to Rs, 50,000 from the higher figure determined by the Appellate Assistant Commissioner. In respect of the year 1952-53 an undertaking was taken from the assessee to file a fresh voluntary return for Rs. 50,000 in place of the much lower inoome originally assessed. At the instance of the department a reference was made to the High Court, and 'failing there, the department appealed to this Court. HELD : The appeal must be allowed. Under s. 33(4) of the Income.tax Act, 1922, the Income-tax Appellate Tribunal may after giving both parties to the appeal an opportunity of being heard, pa" such orders thereon as it thinks fit. The power confer' red by that sub-section is wide, but it is still a judicial power which must be exercised in respect of matters that arise in the appeal and according to law. The Tribunal in deciding an appeal before it must deal with questions of law and fact which arise out of the order <if assessment made by the Income-tax Officer and the order of the Appellate Assistant Com- missioner. It cannot assume powers which are inconsistent with the c:xprc'>r;; pro\·i1;ion'i of the Act 0r its schen1e. r1 I:'.!. R·Fl In the present case the Tribunal was entitled to enquire whether the source of cash credits was explained : if it held that they represented capital or income of earlier years it could exclude them from inc()me liable to be taxed in the year to which the appeal related. But the Tribunal had no .power to find on amalgamation o'f income an average of more yea·rs than one, and to divide it for the purpose of asse:1sment ·between the two years 1952-53 and 1953-54-equally, [712 G: 714 DJ In \vorking out the amalgamated income for the two assessment years in question the Tribunal could not without giving any reasons, and with- out supporting evidence, make allowanc~ as it did (or "intangible. add!.. lions", [714 GJ · A B c D E F G " A B c D E F G II C.l.T. V. MANIC!':: SONS (Shah, J.) 709 The Tribunal hearing an appeal may give directions •for reopening assessment of the year to which the appeal relates : it cannot give any directions to reassess in case of a period not covered by that year. There was no sanction in law to enforce the undertaking given by the respondent when urging his appeal in respect of the year 1953-54, to make a volun- tary return for the year 1952-53; and even if the respondent carried out that undertaking the assessment of 1952-53 could not be reopened other- wise than in the manner prescribed by ·the Act. The undertaking must therefore be ignored. The implied direction given by the Tribunal to the Income-tax Officer to re-assess the income for year 1952·53 was without jurisdiction. [712 D-E; 714 A] The questions raised on behalf of the revenue clearly flowed from the contentions raised before the Tribunal and enquiry into those questions was not barred. [712 J)..E; 714 A] Commissioner of Income-tax, Madras v. S. Ne/liappan, 66 I.T.R. 722, distinguished. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2459 of 1966. Appeal by special Jeave from the judgment and order dated August
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