COMMISSIONER OF INCOME TAX Vs. NANDRAM NARAINDAS

JUDGEMENT

(1.) CAN an ITO include an additional otem in the taxable turnover when the original assessment is set aside by the appellate authority and when the matter is remanded back for fresh decision on a limited issue ? This is the short question which is required to be answered in this reference.

(2.) THE assessee is an HUF. THEre was some dispute as to whether there has been a valid partition of the assets of the HUF. A partition suit was pending. THE AAC who was seized of the matter, set aside the order of assessment and in doing so made the following observations in his order dt. 29th Dec., 1972 :

(3.) AS to what is the scope of the powers of an ITO when he is examining a matter on remand was subject-matter of consideration by the Punjab & Haryana High Court. Chinnappa Reddy, Acting Chief Justice (as His Lordship then was), speaking for the Court in the case of Kartar Singh vs. CIT (1978) 111 ITR 184 (P&H), came to the conclusion that it was not open to the ITO to introduce into the assessment new source of income so as to enhance the assessment. In the present case, as indicated above, the AAC vide order dt. 29th Dec., 1972 had made a categoric observation that the matter relating to assessment of capital gain had attained finality. This aspect of the matter was never challenged by the Revenue. In this&view of the matter, we are of the view that the order passed by the Tribunal holding that the ITO could not enhance the tax liability by including a sum of Rs. 19,236 representing long-term capital gain while making fresh assessment is perfectly in accordance with law. The appeal preferred by the Revenue was rightly dismissed. We find no merit in the submission made by the Revenue and dismiss the reference. The question is answered accordingly.