1968 PLP 165 (PTD)

Income‑tax Act (XI of 1922), S. 31(3)‑-Powers of Appellate Assistant Commissioner‑Whether confined to matters raised by assessee‑Appeal by assessee in respect of Rs. 1,17,643-- Remand of case to Income‑tax Officer‑Report of Income‑tax Officer that his predecessor had wrongly excluded an item of Rs. 4,00,000 from assessment‑Remand of case by Appellate Assis tant Commissioner for re‑assessment after enquiry into the matter of Rs. 4,00,000 also‑Legality of remand. The powers conferred upon the Appellate Assistant Commis sioner by the Income‑tax Act are much wider than the powers of an ordinary Court of appeal. Under the Income‑tax Act once an assessment comes before the Appellate Assistant Commissioner, his competence is not restricted to examining those aspects of the assessment which are complained of by the assessee ; but ranges over the whole assessment, and it is open to him to correct the income‑tax Officer not only with regard to a matter raised by the assessee in the appeal but also with regard to a matter which has been considered by the Income‑tax Officer and 'determined in the course of the assessment. The assessee carried on business at Rajkot and at Bombay, the accounting years at Rajkot and Bombay being different. With regard to the profits of Rajkot, the Income6tax Officer assessed them proportionately at Rs. 1,17,

643. He also found that there were remittances to the extent of Rs. 4,00,000 from Rajkot to Bombay, but in view of the concession allowed by the Part B States Taxation Concession Order he did not include this amount in the assessable income. The assessee appealed with respect to the sum of Rs. 1,17,643 contending that the Rajkot business had no profit at all but only loss: The Appellate Assistant Commis sioner thereupon set aside the assessment and remanded the matter to the Income‑tax Officer for re‑assessment after enquiring into the matters contained in the second report. The question being whether the Appellate Assistant Commissioner's order of remand was valid in law: Held, that the power of the Appellate Assistant Commissioner was not confined to the matter of Rs. 1,17,643 in respect of which the assessee had appealed, but he had power to revise the whole process of assessment once an appeal had been preferred, and the order remanding the case was not invalid in law. [Cases referred to :] By this application, the assessee requires the Appellate Tribunal to refer to the High Court some ten questions of law, which are said to arise out of the Tribunal's order in I.T.A. No. 4719 of 1954‑

55. Inasmuch as, in our opinion, a question of law does arise out of the aforesaid order, we hereby draw up a statement of the case and refer it to the High Court of Judicature at Bombay under section 66(1) of the Indian Income‑tax Act. The assessee agrees that all the material facts have been correctly stated and that there is no omission of any material fact. The Departmental Representative states that the Commissioner did not pass any order (vide para. 9 below) in view of the judgment of the High Court in Commissioner of Income‑tax, Bombay North v. Amritlal Bhogilal and Co. ((1953) 23 I T R 420). The assessee does not accept this statement.

2. The assessee has several business activities. The assessee has also a branch at Rajkot. The year of account of the assessee for his business at Bombay is the Samvat year, whereas the year of account for his business at Rajkot is the financial year although this is not so clear in the return filed by the assessee at Bombay for the assessment year 1950‑

51. The Income‑tax Officer at Jam nagar assessed the assessee on the basis of the year of account being the financial year. According to the assessee, the profit at Rajkot from 2nd November 1948, to 31st March 1949, amount ed to Rs. 2,41,

586. From 1st April 1949 to 21st October 1949, again, according to the assessee there was a loss of Rs. 61,

071. The sum of Rs. 2,41,586 was assessed by the Income‑tax Officer, Jamnagar, under the Saurashtra Income‑tax Ordinance. The assessee therefore claimed before, the Income‑tax Officer that for making the assessment at Bombay for the assessment year 1950‑51, year of account being S. Y. 2005 (2nd November 1948, to 21st October 1949) he should be allowed the loss of Rs. 61,

071. The Income‑tax Officer rejected the claim stating as follows "Accounts of the branch at Rajkot were produced and seen. There is profit there. It is shown that the profits of this business for the year ending March 1949, were already assessed by the Income‑tax Officer, Jamnagar. Accordingly, the said profits can not be assessed here for a second tide. But the profits arising from 1st April 1949 to 21st October 1949, are however, assessable here but as it is not possible to determine the income of this period I take the profit proportionately and add Rs. 1,17,

643. During the year of account there are remittances of Rs. 4,00,000 from Rajkot to Bombay. The remittance will not, however, be liable to tax in view of the concession allowed in the Part B States Concession Order."

3. The Income‑tax Officer determined a net loss of Rs.1,38,934 for the assessment year 1950‑

51. A copy of the Income‑tax Officer's assessment order dated 30th June 1952, is Annexure `A' and forms part of the case.

4. The assessee thereupon appealed to the Appellate Assistant Commissioner. A copy of the grounds of appeal is Annexure `B' and forms part of the case. The relevant ground of appeal before the Appellate Assistant Commissioner was as follows: "The Income‑tax Officer also erred in reducing your petitioner's loss by Rs. 1,17,643 being the alleged income from Rajkot. Your petitioner suffered a loss of Rs. 61,071 in Rajkot business."

5. Besides the ground of appeal reproduced above, there were four other grounds of appeal relating to the other matters in the assessment made by the Income‑tax Officer.

6. At the hearing of the said appeal on 21st November 1952, the Appellate Assistant Commissioner was satisfied that it was possible to ascertain the profit for' the period 2nd November 1948, to 31st March 1949 (i.e. Kartak Sudd first of S. Y. 2005 to 31st March 1949). The Appellate Assistant Commissioner there fore remanded the matter to the income‑tax Officer by his order dated the 29th November 1952. A copy of the first remand order dated 29th November 1952, is Annexure; `C' and forms part of the case. The Income‑tax Officer submitted his report thereto on 25th February 1953. A copy of the remand report dated 25th February 1953, is Annexure `D' and forms part of the case.

7. The Appellate Assistant Commissioner passed a second remand order on 30th April 1954, in the following terms: "Heard appellant. He contends that the profits of Rs. 2,41,586 prior to 1st April 1949, had already been included by the Income‑tax Officer, Saurashtra, while making assessment on an income of Rs. 6,32,666 for the financial year ending 31st March 1949. A copy of this order (which may be returned along with the report) is forwarded to the Income‑tax ‑Officer who will verify and report by 30th May 1954, if the contention is correct. This point was left undecided in his report dated 25th February 1953."

8. Thereupon the Income‑tax Officer ascertained that the said sum of Rs. 2,41,586 being profits for the period 2nd Novem ber 1948, to 31st March 1949, were included in the income of Rs. 6,32,666 assessed by the Income‑tax Officer, Jamnagar, for the accounting year 1st April 1948, to 31st March 1949. A copy of the said Income‑tax officer's second remand report dated 21st July 1954, is Annexure Wand forms part of the case.

9. The assessee received a notice dated the 21st May 1954, from the Commissioner of Income‑tax issued by him under section 33‑B of the Act calling upon the assessee to show cause why the said two remittances aggregating to Rs. 4 lakhs should not be included in the income of the assessee for the assessment year 1950‑

51. A copy of the said notice is Annexure `F' and forms part of the case. By his letter dated 1st June 1954, the assessee submitted to the Commissioner of Income‑tax that the said remittances of Rs. 4 lakhs were not liable to be taxed. A copy of the said letter dated 1st June 1954, is Annexure `G' and forms part of the case. Mr. Kolah said that the Commissioner had dropped the proceedings initiated by the issue of the notice on 21st May 1954. The Departmental Representative informed us that the Commissioner had kept the matter pending. As nothing turned on the decision of the Commissioner, we did not verify what action the Commissioner proposed to take.

10. In his remand report dated 21st July 1954, to the Appellate Assistant Commissioner (Annexure `E') the Income‑tax Officer stated that the assessment had come before the Appellate Assistant Commissioner in appeal and since the appeal was pend ing he urged that his predecessor had committed a mistake in interpretation of law in not including Rs. 4 lakhs and that it was open to the Appellate Assistant Commissioner to correct the same in the course of proceedings pending before him. The Income‑tax Officer, therefore, urged that the assessment for income -tax year 1950‑51 be enhanced by a sum of Rs. 4 lakhs being remittances from Saurashtra chargeable to tax but erroneously excluded from assessment by his predecessor:

11. On 6th October 1954 the Appellate Assistant Commissioner passed an order setting aside the assessment and directing the Income‑tax Officer to make a re‑assessment. The order runs as follows: "One of the main contentions raised by the appellant in this appeal is that the Income‑tax Officer erroneously assessed an income of Rs. 1,17,643 from Rajkot business, where a loss of Rs. 61,071 should have been allowed. The confusion arose be cause the accounts of the Bombay and Rajkot business were not co‑terminus, and in his report, later on, the Income‑tax Officer has virtually admitted the mistake and accepted the loss claimed with minor modifications. (2) At the appellate stage, however, the present Income‑tax, Officer has raised an important point that was overlooked, accor ding to him, by his prodecessor making the assessment. There was a remittance, in the year of account, of a sum of Rs. 4 lakhs from Rajkot which was originally exempted from assessment an view of the concessions allowed in Part B States Taxi Concession Order. The present Income‑tax Officer says this was wrong and the amount is includible in assessment. (3) In order that the appellant may have the opportunity of having his say in an important matter like the above, it is only desirable that the assessment be remanded to the Income‑tax Officer for re‑assessment. Incidentally, this will also furnish both the Income‑tax Officer and the app; pant the opportunity to reconsider the other points and effect corrections, if need be, in consultation with each other."

12. The assessee thereupon appealed to the Appellate Tribunal against the order of the Appellate Assistant Commis sioner setting aside the assessment and directing a re‑assessment by the Income‑tax Officer. The grounds of appeal before the Appellate Tribunal were as follows: "(1) The Appellate Assistant. Commissioner of Income‑tax, F Range, Bombay, erred in setting aside the assessment of the Income‑tax Officer and directing him to make a re‑assessment for the year 1950‑51 instead of deciding the appeal on the points raised before him for which purpose he had remanded the case and received the Income‑tax Officer's remand report. (2) The said Appellate Assistant Commissioner has set aside the assessment and directed re‑assessment on the ground that the Income‑tax Officer argued that the non‑inclusion in the assess ment of the appellant firm of the alleged remittance of rupees four lakhs from Rajkot by the Income‑tax Officer assessing the appellant was in his opinion a mistake. The Appellate Assistant Commissioner erred and has exceeded his powers given under section 31 of the Indian Income‑tax Act by allowing an oppor tunity to the Income‑tax Officer to revise his orders in respect of the alleged remittance of rupees four lakhs from Rajkot by setting aside his order and directing re‑assessment. (3) The Appellate Assistant Commissioner should have restricted his decision to the points raised before him in appeal, and he should not have allowed the Income‑tax Officer to raise any point which was not in dispute. (4) The said Appellate Assistant Commissioner by setting aside the assessment and directing re‑assessment which he was not entitled to do under the Act has given the opportunity to the Income‑tax Officer to reconsider the decision of his predeces sor and assess the item which was not assessed by his predecessor and which was not an item in appeal before the Appellate Assis tant Commissioner. (5) The said Income‑tax Officer under the Indian Income tax Act has not been given any powers to revise his own assess ments and he could do so only under certain circumstances and conditions laid down under section 54 of the Income‑tax Act. (6) The said Appellate Assistant Commissioner under the facts and circumstances of the case ought to have passed final orders on the appeal before him and ought not to have set aside the order of the Income‑tax Officer directing re‑assessment. (7) The order of the Appellate Assistant Commissioner is illegal and bad in law."

13. The Tribunal dismissed the appeal, saying that the Appellate Assistant Commissioner in setting aside the assessment and directing a fresh, assessment had not exceeded his powers. A copy of the Tribunal's order is Annexure `H' and forms part of the case.

14. The assessee has suggested a number of questions for being referred to the High Court: In our opinion, the following questions of law are sufficient to cover the issues raised by the assessee. We, therefore, refer the following questions to the High Court : "(1) Whether in the circumstances of the case, the Appellate Assistant Commissioner was competent to enhance the assessment by the sum of Rs. 4 lakhs said to have been remitted of the assessee from Rajkot to Bombay in the year of account even though the question of remittance did not form part of the grounds of appeal before him? (2) Whether in the circumstances of the case the order of the Appellate Assistant Commissioner remanding the case to the Income‑tax Officer for re‑assessment is valid in law ?" "A preliminary objection is taken by the Departmental Re presentative to the effect that the appeal is not maintainable. The Appellate Assistant Commissioner by his order under appeal set aside the assessment made by the Income‑tax Officer for the year 1950‑51 and has directed a fresh re‑assessment according to law. The assessee feels aggrieved by the order of the Appellate Assistant Commissioner and we can easily understand that he feels aggrieved. The assessee objects to the order passed by the Appellate Assistant Commissioner. Section 33(1) provides inter alia that any assessee objecting to an order passed by an Appellate Assistant Commissioner under section 31 may appeal to the Appellate Tribunal. We are unable to say that the present appeal is not maintainable merely because the Appellate Assistant Commissioner has set aside the assessment and directed a fresh assessment according to law. * * * * * * Mr. Kolah contends that by setting aside the assessment and by directing a fresh assessment according to law, the Appellate Assistant Commissioner is trying to circumvent the law. Accord ing to Mr. Kolah the Appellate Assistant Commissioner, even though he may not have set aside the assessment, could not have enhanced the assessment by including in the total income the remittance of 4 lakhs rupees, assuming that the remittance of Rs. 4 lakhs was liable to be included in the total income of the assessee for the assessment year 1950‑

51. According to Mr. Kolah the Appellate Assistant Commissioner was bound to confine himself to the points raised by the assessee in his memo of appeal. Various authorities were cited before us. We do not agree with Mr. Kolah that the Appellate Assistant Commissioner by setting aside the assessment and by directing a fresh assessment intended to circumvent the law. The order of the Appellate Assistant Commissioner speaks for itself. One more fact might also be stated as it was brought to our notice. In connection with assessment made by the Income‑tax Officer, the Commis sioner of Income‑tax issued a notice to the assessee under section 33‑B(1) on 21st May 1954. Apparently, the Commissioner thought that the Income‑tax Officer was wrong in saying that the remittance was not liable to tax, in view of the concession allowed in Part B States Concession Order. A reply to this notice was sent by the assessee to the Commissioner on 1st June 1954. Mr. Kolah says that the Commissioner has dropped the proceedings initiated by the issue of the notice on 21st May 1954. The Departmental Representative informs us that the Commissioner has kept the matter pending. As nothing turns on the decision of the Commissioner we have not verified what action the Commissioner proposes to take. In our opinion, the power of the Appellate Assistant Commis sioner to enhance the assessment under appeal is not fettered by any provisions contained in section 34 of the Indian Income‑tax Act. If we had been placed in the position of the Appellate Assistant Commissioner we ourselves would have issued a notice to the assessee calling upon it to show cause why the assessment should not be enhanced. There is only one assessment which is indivisible and the powers of the Appellate Assistant Commis sioner to enhance the assessment are not circumscribed at all. The Appellate Assistant Commissioner suo motu may issue a notice calling upon the assessee to show cause why the assess ment should not be enhanced. The Appellate Assistant Commis sioner may even issue a notice at the instance of the Income‑tax Officer. It is open to an Income‑tax Officer to go to the Appel late Assistant Commissioner and say that he has made a mis take and the assessment may be enhanced. It is open to the income‑tax Officer to say to the Appellate Assistant Commis sioner that certain income has escaped assessment and, there fore, assessment may be enhanced. What we would have done however does not help us in the matter at all. We do not think it expedient to vacate the order of the Appellate Assistant Commissioner and direct him to dispose of the appeal according to law. In our opinion the powers of the Appellate Assistant Commissioner to set aside an assessment and direct a fresh assessment according to law are also unfettered. We are unable to say that the Appellate Assis tant Commissioner in setting aside the assessment and directing a fresh assessment has exceeded his powers." R. J. Kolah for the Assessee. G. N. Joshi with Advocate‑General for the Commissioner. CHAGLA, C. J.‑This reference raises a rather important and interesting question as to the powers which the Appellate Assis tant Commissioner can exercise when an appeal is preferred by an assessee against an assessment made by the Income‑tax Officer. The assessee was carrying on a business in Bombay and in Rajkot and the accounting years of the Bombay and Rajkot business were different and therefore there was some overlapping of income. With regard to the profits of Rajkot, the Income tax Officer assessed them proportionately at Rs. 1,17,

643. He also considered the remittances made from Rajkot to Bombay and determined the amount at Rs. 4,00,

000. He considered whether this remittance was liable to tax and came to the conclusion, in view of the concession allowed in the Part B States Concession Order, that, this sum was not liable to tax. The appeal of the assessee was confined to the profit of Rs. 1,17,643, and its case was that the Rajkot business had suffered a loss of Rs. 61,

071. The Appellate Assistant Commissioner disagreed with the Income‑tax Officer in his view that the profit should be ascertained on a proportionate basis and he directed that he should ascertain the actual profit for the relevant period earned by the business at Rajkot and he remanded the matter to the Income‑tax Officer. On this order of remand a report was made by the Income tax Officer on the 25th February 1953, which accepted the figure given by the assessee that the loss at Rajkot was Rs. 61,071, but reduced the amount, owing to certain considerations with which we are not concerned, to Rs. 35,

988. The Income tax Officer pointed out that no assessment order from the Income‑tax Officer at Rajkot in respect of the earlier income was produced before him. He made a second remand report on the 21st July 1954, and in this report he stated that the order for assessment of the Rajkot income had been produced before him. He further pointed out that since the assessment had come up before the Appellate Assistant Commissioner in appeal and since the appeal was still pending, he would like to point out to the Appellate Assistant Commissioner that there was some error on the part of the Income‑tax Officer in the interpretation of the Part B States (Taxation Concession) Order, 1950, and the assessment for 1950‑51 should be enhanced by a sum of Rs. 4,00,000 being the remittance from Saurashtra as being chargeable to tax and having been erroneously excluded from assessment. On this the Appellate Assistant Commissioner passed an order setting aside the assessment and remanding the matter to the Income‑tax Officer for reassessment. It is this order that is now challenged by the assessee as beyond the competence of the Appellate Assistant Commissioner. Now, in order to understand what the competence of the Appellate Assistant Commissioner is and what are the powers conferred upon the Appellate Assistant Commis sioner, it is necessary to bear in mind certain salient facts. It is only the assessee who has a right conferred upon him to prefer an appeal against the order of assessment passed by the Income‑tax Officer. If the assessee does not choose to appeal, the order of assessment becomes final subject to any power of revision that the Commissioner might have under section 33‑B of the Income‑tax Act. Therefore, it would be wholly erroneous to try and compare the powers of the Appellate Assistant Commissioner with the powers possessed by a court of appeal, under the Civil Procedure Code. The Appellate Assistant Commissioner is not an ordinary court of appeal in the sense in which that expression is understood in the Civil Procedure Code. It is impossible to talk of a court of appeal when‑ only one party to the original decision is entitled to appeal and not the other party, and in view of this peculiar position occupied by the Appellate Assistant Commissioner, the Legislature, as we shall presently point out, has conferred very wide powers upon the Appellate Assistant Commissioner once an appeal is preferred to him by the assessee. If the assessee chooses to remain content with the order of the Income‑tax Officer there is nothing that the Appellate Assistant Commissioner can do, however, erroneous the assessment may be. But if the assessment is opened up by the action of the assessee himself, then the powers conferred upon the Appellate Assistant Commissioner are much wider than the powers of an ordinary court of appeal. The statute provides that once an assessment comes before the Appellate Assistant Commissioner, his competence is not restricted to examining those aspects of the assessment which are complained of by the assessee ; his competence ranges over the whole assessment and it is open to him to correct the Income‑tax Officer not only with regard to a matter raised by the assessee but also with regard to a matter which has been considered by the Income‑tax Officer and determined in the course of the assessment. Now, the section we are concerned with is section 31(3) and that subsection provides: "In disposing of an appeal the Appellate Assistant Commis sioner may, in the case of an order of assessment,‑ (a) confirm, reduce, enhance or annul the assessment, or (b) set aside the assessment and direct the Income‑tax Officer to make a fresh assessment after making such further inquiry as the Income‑tax Officer thinks fit or the Appellate Assistant Commissioner may direct, and the Income‑tax Officer shall thereupon proceed to make such fresh assessment, and determine where necessary the amount of tax payable on the basis of such fresh assessment." It will be immediately noticed that in giving the power of enhancing the assessment, the Legislature has strikingly deviated from the ordinary principles that govern the court of appeal. Although the Department cannot appeal against the order of the Income‑tax Officer and although the appeal is only by the assessee, even so the Legislature confers upon the Appellate Assistant Commissioner the power to make an order which is obviously, to the prejudice of the appellant. Therefore, although the appellant may only complain of particular points in the assessment and he may be satisfied with regard to the rest of the assessment, the Appellate Assistant Commissioner's powers are not confined to consider only these points about which the assessee has a grievance but he may consider those points about which the assessee is satisfied and order the enhancement of the assessment. Now, it is clear that going by the plain words used by the Legislature there are no words of limitation or qualification upon the power of the Appellate Assistant Commissioner in enhancing the assessment or setting aside the assessment and directing a fresh assessment to be made by the Income‑tax Officer. But what Mr. Kolah says is that words of qualification and limitation have been read into this subsection by judicial interpretation and he also says that from the very nature of the fact that the Appellate Assistant Commissioner is exercising powers of appeal, certain limitations must be imposed upon his powers, and what Mr. Kolah contends is that the power of the Appellate Assistant Commissioner is confined to the subject‑matter of the appeal. In other words, the Appellate Assistant Commissioner cannot travel outside the questions raised by the assessee by his grounds of appeal, and Mr. Kolah also contends that the only assessment with which the Appellate Assistant Commissioner can deal is the assessment in the sense of the income of the assessee actually assessed to tax. So that what Mr. Kolah would have us hold is that if the Income‑tax Officer has dealt with a particular income of the assessee and come to the conclusion that that income is not liable to tax, the Appellate Assistant Commissioner cannot reverse the decision of the Income‑tax Officer. Mr. Kolah would go further and say that even if dealing with the same source of income the Income‑tax Officer has come to the conclusion that a particular receipt is not liable to tax, the Appellate Assistant Commissioner cannot go behind the decision of the Income‑tax Officer because the assessee was only complaining against the receipt which has been brought to tax. Such an interpretation of section 31 (3) would not only completely clip the powers of the Appellate Assistant Com missioner but would fail to give effect to the object that the Legislature had in conferring this rather extraordinary power upon the Appellate Assistant Commissioner. It is clear that the Appellate Assistant Commissioner has been constituted a revising authority against the decisions of the Income‑tax Officer ; a revising authority not in the narrow sense of revising what is the subject‑matter of the appeal, not in the sense of revising those matters about which the assessee makes a grievance, but a revising authority in the sense that once the appeal is before him he can revise not only the ultimate computation arrived at by the Income‑tax Officer but he can revise every process which led to the ultimate computation or assessment. In other words, what he can revise is not merely the ultimate amount which is liable to tax, but he is entitled to revise the various decisions given by the Income tax Officer in the course of the assessment and also the various incomes or deductions which came in for consideration of the Income‑tax Officer. Turning to the authorities, we find that the position we have just stated is amply borne out. Mr. Kolah cited certain authorities, on which he relied for a more limited purpose. His contention was that 'even if he is not right in the contention that he made and the powers of the Appellate Assistant Commissioner are wider, even so they are confined to this that if an assessee goes in appeal complaining of an assess ment under a particular head, then it may be open to the Appellate Assistant Commissioner to enhance the assessment under that head, but it is not open to him to deal with another head in respect of which the assessee has not appealed and in respect of the assessment of which head the assessee has been content. On this limited submission what is urged by Mr. Kolah is that here the remittance would fall under section 12 under the head of "Other sources." Under that head the assessment order has assessed dividends and not assessed the sum in dispute, viz., Rs. 4,00,

000. The assessee's appeal was only with regard to assessment under section 10 under the head "Business." Therefore, according to Mr. Kolah, it was open to the Appellate Assistant Commissioner to enhance the assessment qua the head of "Business", but it was not open to him to set aside the assessment qua the head "Other sources" under section 12 and direct the Income‑tax Officer to go into the question of Rs. 4,00,000 when the assessee himself did not appeal with regard to the assessment under that head in our opinion, on a careful consideration of the authorities relied upon by Mr. Kolah, he is in error even in this limited submission. The first decision relied upon by Mr. Kolah is a very early decision of the Patna High Court reported in Jagarnath Therani v. Commissioner of Income‑tax. ((1925) 2 I T C 4) The assess6e had three businesses, one at Purnea, another at Jalpaiguri, and the third at Calcutta, and in the year of, account the Income‑tax Officer assessed him in respect of his income from Purnea and the assessee preferred an appeal to the Appellate Assistant Commissioner, and while the appeal was pending the Income‑tax Officer began to take steps to assess the income in Jalpaiguri and Calcutta, and the Appellate Assistant Commissioner in the appeal assessed the. appellant on his total income in Calcutta, Purnea and Jalpaiguri, and the question that arose before the Patna High Court was whether the Appellate Assistant Commissioner was competent to enhance his assessment in respect of businesses at Calcutta and Jalpaiguri, and the Court held that the Appellate Assistant Commissioner was not' competent to do so, and the reason why the Patna High Court came to that conclusion is stated in the judgment at page 8: "Now this section [section 31(3)] relating to appeals is enacted for the benefit of the subject and also, to the limited extent therein stated, for the benefit of the Crown. But the subject‑matter of the appeal is the assessment and the scope of the appeal must in my opinion be limited by the subject‑matter. The appellate authority has no power to travel beyond the subject-matter of the assessment, and, for all the reasons advanced by the appellant, it is in my opinion not entitled to assess new sources of income." The principle which clearly emerges from these observations is that the Appellate Assistant Commissioner cannot travel beyond the subject‑matter of the assessment. Note that it is not the subject‑matter of the appeal but the sub ject‑matter of the assessment, and when the learned Judges say that the Appellate Assistant Commissioner is not entitled to assess new sources of income, this expression is not used in the sense in which Mr. Kolah wants us to use it, but in the sense that a source from which income may spring may not have been considered by the Income‑tax Officer at all, and if that be the position then it would not be open to the Appellate Assistant Commissioner to assess the assessee with regard to that source. It is in this sense that the source is looked upon by the Patna High Court as a new source. The same view is taken by the Madras High Court in Gajalakshmi Ginning Factory v. Commissioner of Income‑tax ((1952) 22 I T R 502). At page 510 we find the following observation: "Of course, it would not be open to the Appellate Assistant Commissioner to introduce into the assessment new sources, as his power of enhancement should be restricted only to the income which was the subject‑matter of consideration for purposes of assessment by the Income‑tax Officer." Therefore, if an income is the subject‑matter of consideration by the Income‑tax Officer, and even though the Income‑tax Officer may come to the conclusion that that income is not subject to tax, it would be open to the Appellate Assistant Commissioner to take a different view and to bring that income to tax. That is exactly the position here. The income of Rs. 4,00,000 was the subject‑matter of consideration by the Income‑tax Officer for the purpose of assessment. It is true that the Income‑tax Officer came to the conclusion that it was not liable to tax, but that does not prevent the Appellate Assistant Commissioner from coming to a contrary conclusion. The Patna High Court, again, in a very recent judgment, has accepted the same position in law and has relied on the judgment of the Madras High Court, to which reference has just been made, as enunciating the correct principle of law. See Bishwanath Prasad Rhagwat Prasad v. Commissioner of Income‑tax ((1956) 29 I T R 748). It is true that on the facts of that case the enhancement by the Appellate Assistant Commissioner was confined to the same head in respect of which the appeal was preferred. The facts briefly were that the question in issue before the Income‑tax Officer was whether two cash receipts of Rs. 18,730 and Rs. 64,000 should be brought to tax. The Income‑tax Officer held that Rs. 18,730 was liable to tax and accepted the contention of the assessee in regard to Rs. 64,000, and on appeal the Appellate Assistant Commissioner set aside the order of the Income‑tax Officer and came to the conclusion that the other receipt should also be brought to tax and remanded the case to the Income‑tax Officer for re‑assessment, and it is at page 758 that we find the Patna High Court setting out the passage from the judgment of the Madras High Court and the passage contains the important words to which we have already drawn attention, viz. "Of course, it would not be open to the Appellate Assistant Commissioner to introduce into the assessment new sources, as his power of enhancement should be restricted only to the income which was the subject‑matter of consideration for purposes of assessment by the Income tax Officer." Therefore, though the facts may seem to support Mr. Kolah's contention, the principle which the Patna High Court has accepted is the same as was accepted by the Madras High Court and by the Patna High Court in the earlier decision. Then there is an unreported judgment of this Bench in Sheriff Jiva & Co. Ltd., Mombassa v. Commissioner of Income tax, Bombay City (I T Reference No. 10 of 1956) delivered on 9th October 1950. There also we have explained the power of the Appellate Assistant Commissioner in practically the same language and this is what we said: "When the Appellate Assistant Commissioner exercises his power of enhancement, he is dealing with the subject -matter of appeal before him, and enhancement is confined to the sources or items in respect of which the assessment has been made by the Income‑tax Officer." Therefore, the appeal is not confined to the subject‑matter of the appeal as restricted by the appellant himself, but the power of the Appellate Assistant Commissioner extends to considering alt sources and items in respect of which the assessment is made, and the expression "assessment is made" does not carry the meaning that the sources and items have been brought to tax. In this case assessment was made in respect of Rs. 4,00,000, in the sense that it was considered by the Income‑tax Officer and not brought to tax. Then there are two other judgments of this Court to which reference might be made. They are Commissioner of Income‑tax v. Tejaji Farasram Kharawala ((1953) 23 I T R 412) and Commissioner of Income‑tax v. Amritlal Bhogilal and Co. ((1953) 23 I T R 420). What arose for our consideration in these two cases was the power of the Commissioner under section 33‑B of the Income‑tax Act, and in these two, cases we held that whether an appeal was pending before the Appellate Assistant Commissioner or whether an appeal had been disposed of by the Appellate Assistant Commissioner, if it was open to the Commissioner to raise a particular contention before the Appellate Assistant 'Com missioner then it was not competent to him to deal with that matter under the extraordinary power conferred upon him under section' 33‑B, and what Mr. Joshi relies upon in the concession made by Sir Nusserwanji which appears at page 419 that once an appeal is preferred by the assessee it was open to the Commissioner to raise before the Appellate Assistant Commissioner any matter dealing with the assessment of the assessee, and it appears that we held, giving effect to this concession, that an order by the Income‑tax Officer registering a firm could be challenged by the Commissioner before the Appellate Assistant Commissioner if the assessee has preferred an appeal. Mr. Kolah drew our attention to the fact that this decision may have to be reconsidered because it does not appear that there is any power conferred upon the Appellate Assistant Commissioner to reverse an order passed by the Income‑tax Officer registering a firm. But whether the decision is correct with regard to this actual decision, if we might say so, the ratio of the decision still holds good, and the ratio is this that to the extent that the Commissioner can agitate a matter before the ordinary tribunal set up by the Income‑tax Act, viz., the Appellate Assistant Commissioner, it is not open to him to exercise his extraordinary powers under section 33‑B. But neither of these two decisions really help us to decide the question before us, because the question is not what are the powers of the Commissioner under sec tion 33‑B, but what are the powers of the Appellate Assistant Commissioner. To the extent that the Appellate Assistant Commissioner has a particular power, that power is taken away from the Commissioner under section 33‑B if the assessee appeals and permits the Appellate Assistant Commissioner to reverse an order passed by the Income‑tax Officer. Of course, there are observations in these two judgments which go to show how wide and unfettered the powers of the Appellate Assistant Commissioner are. We do not think it can be seriously' disputed that those powers are very wide, but the only question before us is whether there is any limitation upon those powers, and if there is a limitation, what is the nature and character of that limitation, and in the course of our judgment we have sought to indicate the nature and character of that limitation. It is not as if the Appellate Assistant Commissioner has completely unqualified powers ; his powers are limited to the subject‑matter of the assess ment and we have attempted to define what the subject‑matter of the assessment is. Two questions have been submitted to us. We will take question (2) first viz., "Whether in the circumstances of the case the order of the Appellate Assistant Commissioner remand ing the case to the income‑tax Officer for re‑assessment is valid in law?" Our, answer will be in the affirmative. Question (1) really does not arise because it is not correct to say that the Appellate Assistant Commissioner has enhanced the assess ment with regard to Rs. 4,00,

000. All that he has done is to have remanded the matter to the Income‑tax Officer for his consideration. The assessee to pay the costs of the reference. No order on the notice of motion. No order as to costs. Question answered in the affirmative.