What the courts have decided on section 251(1)(a), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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CIT v Nirbheram Daluram
Supreme CourtHelps department
The first appellate authority has enhanced my assessment using items the Assessing Officer never looked at. Can it do that, or has it gone beyond its jurisdiction?
It can. The Supreme Court held that the appellate power under section 251 is not confined to matters the Assessing Officer considered. Following the three-judge decision in Kanpur Coal Syndicate and the three-judge decision in Jute Corporation of India, the first appellate authority has plenary powers, coterminous with those of the Assessing Officer: it may confirm, reduce, enhance or annul the assessment, may do what the Assessing Officer could do, and may direct him to do what he failed to do. The Act places no restriction on that power, so ten further hundi credits of Rs 2,30,000 were properly added.
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CIT v Sardari Lal & Co
High CourtHelps taxpayerNo later treatment found
Can the CIT(A) enhance my assessment by taxing a source the AO never looked at?
No. The power of enhancement is confined to the subject matter of the assessment under appeal — the items the AO considered, expressly or by necessary implication. A new source has to be brought to tax by reassessment or by revision, each of which carries its own safeguards and time limits.
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CIT v Union Tyres — the Commissioner (Appeals) cannot bring in a new source of income
High CourtCuts both ways
Can the Commissioner (Appeals) use the enhancement power to tax a source of income the Assessing Officer never considered?
No. The Delhi High Court held that the first appellate authority's power, wide as it is, carries one limitation: it cannot introduce into the assessment a new source of income that the Assessing Officer never considered. That is what this judgment decides, and it decides it under s.251(1)(a). It does not say where the Revenue must go instead — for that, see CIT v Sardari Lal & Co, the Full Bench decision two years later, which added that the route lies under s.147/148 or s.263.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
