NARASIMHA REDDY B Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference directed by this court under section 66(2) of the Indian Income-tax Act, 1922, at the instance of the assessee and the question of law which is now before us is whether, on the facts and in the circumstances of the case, the Appellate Assistant commissioner was justified in law in enhancing the revised figure of income computed by the Income-tax Officer by a sum of Rs. 3,822.

(2.) THE assessee preferred an appeal from this assessment to the Appellate Assistant commissioner and that appeal proved unfortunate for him for the reason that in the proceedings in that proved unfortunate for him for the missioner proposed to enhance the income from the lorry business to the original sum of Rs. 8,600 determined by the income-tax Officer. This he proposed to do on the basis of the pronouncement made by this court in S. Natarajan v. Commissioner of Income-tax in which it was explained that an enquiry under section 34 should be confined in a case where it was proposed to assessment or reassessment. He accordingly made the enhancement with he proposed and determined the income from the lorry business to be Rs. 8,600 on no other ground than that the income-tax Officer had no power to reduce that income to a smaller figure.

(3.) THIS, therefore, is a case in with there was a misapplication of the enunciation made by this court in Natarajan's case. The Appellate Assistant commissioner did not, on a perusal of the available material, reach the conclusion that there was any mistake committed by the Income-tax Officer in reducing the income from the lorry business. The only basis for his view was that the income-tax Officer had no competence to make that reduction. But it is clear that that view taken by him was mistaken.