JUDGMENT
J.S. Verma, Actg. C.J.
1. The petitioner is a medical practitioner at Bhopal. For the assessment year 1980-81, of which the previous year ended on March 31, 1980, the petitioner filed a return showing a total income of Rs. 25,304, out of which the income from the medical profession was shown at Rs. 24,000. The Income-tax Officer, by his order dated March 22, 1983, estimated her income from the medical profession at Rs. 30,000 and the total income was assessed at Rs. 16,700. The petitioner preferred an appeal to the Appellate Assistant Commissioner aggrieved by the Income-tax Officer’s assessment. In the appeal, the Appellate Assistant Commissioner issued a notice, annexure C, dated July 11, 1984, to the petitioner under Section 251(1)(a) of the Income-tax Act, 1961, to show cause why the income arising in the name of Vimala Nursing Home at Bhopal be not included in her individual income for this assessment year for the reasons given in the notice. The persons likely to be affected by such an action were also given opportunity to show cause against the same. Aggrieved by the issuance of this notice, the petitioner has filed this writ petition for quashing the same.
2. The scope of power of the Appellate Assistant Commissioner in disposing of an appeal under Section 251(1)(a) of the Income-tax Act, 1961, is well-settled by authoritative decisions of the Supreme Court. Learned counsel for the petitioner contends that, on the facts and in the circumstances of the present case, the Appellate Assistant Commissioner is not empowered to examine the matter mentioned in the impugned notice in the petitioner’s appeal pending before him since that would amount to examining a new source of income not shown in the petitioner’s return and not considered in the Income-tax Officer’s order of assessment. It is argued that the power available in disposing of such an appeal does not extend to examining the same and, therefore, the impugned notice is liable to be quashed being in excess of jurisdiction of the Appellate Assistant Commissioner. This is the only question for decision in this petition.
3. Section 251(1)(a) of the Income-tax Act, 1961, empowers the Appellate Assistant Commissioner in disposing of an appeal by the assessee against an
order of assessment to confirm, reduce, enhance or annul the assessment or to set aside and refer the case back to the Income-tax Officer for making a fresh assessment in accordance with the directions given by the Appellate Assistant Commissioner. The Explanation to Section 251 is also significant. It indicates that the Appellate Assistant Commissioner may consider and decide any matter arising out of the proceedings in which the order appealed against was passed notwithstanding that such matter was not raised before the Appellate Assistant Commissioner by the appellant. The scope of the power of the Appellate Assistant Commissioner enabling him to make an enhancement in the assessee’s appeal is well settled by decisions of the Supreme Court. While construing the corresponding provisions of the Indian Income-tax Act, 1922, relating to the jurisdiction of the Appellate Assistant Commissioner in such an appeal, the principle emerging from the authorities was summarised by their Lordships of the Supreme Court in CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443, at pages 450 and 451 :
” The principle that emerges as a result of the authorities of this court is that the Appellate Assistant Commissioner has no jurisdiction, under Section 31(3) of the Act, to assess a source of income which has not been processed by the Income-tax Officer and which is not disclosed either in the returns filed by the assessee or in the assessment order, and, therefore, the Appellate Assistant Commissioner cannot travel beyond the subject-matter of the assessment. In other words, the power of enhancement under Section 31(3) of the Act is restricted to the subject-matter of assessment of the source of income which have been considered expressly or by clear implication by the Income-tax Officer from the point of view of the taxability of the assessee…… In this context ‘consideration’ does not mean
‘incidental’ or ‘collateral’ examination of any matter by the Income-tax Officer in the process of assessment. There must be something in the assessment order to show that the Income-tax Officer applied his mind to the particular subject-matter of the particular source of income with a view to its taxability or to its non-taxability and not to any incidental connection.”
4. It is unnecessary to refer to any other decision which merely reiterates this settled principle.
5. The question now is, whether in the present case, the impugned notice falls within the ambit of the powers of the Appellate Assistant Commissioner given by Section 251(1)(a) of the Income-tax Act, 1961.
6. It is contended by learned counsel for the petitioner that the income arising in the name of Vimala Nursing Home at Bhopal, in respect of which the impugned notice, annexure C, dated July 11, 1984, has been
given to the petitioner was neither shown in the petitioner’s return nor was it considered by the Income-tax Officer in the course of the petitioner’s assessment for the relevant assessment year. On this basis, it is contended that the Appellate Assistant Commissioner has acted in excess of jurisdiction in issuing this notice which amounts to travelling outside the record with a view to finding out a new source of income not disclosed either in the petitioner’s return or the assessment order dated March 22, 1983, passed by the Income-tax Officer. A perusal of the record including the original record, which has been made available to us at the hearing by learned counsel for the Revenue, indicates that the matter in respect of which the impugned notice has been issued to the petitioner was expressly considered by the Income-tax Officer and, therefore, the Appellate Assistant Commissioner had the authority to issue such a notice by virtue of the power given by Section 251(1)(a) of the Act. The record shows that the petitioner was required to explain why the income arising in the name of Vimala Nursing Home at Bhopal be not treated as the petitioner’s individual income for the purpose of being included in the petitioner’s assessment of income as an individual. A written reply dated March 22, 1983, was filed by the petitioner saying that the income arising in the name of Vimala Nursing Home could not be treated as her income as an individual. Thereafter, the Income-tax Officer, in the order of assessment passed later on the same day, came to the conclusion that it was difficult to hold that the income of the nursing home really belonged to the petitioner as an individual and accordingly the same was not included in her individual income. This note of the Income-tax Officer is contained at the end of the Income-tax Officer’s order dated March 22, 1983, duly signed by him. It cannot be doubted that when this note of the Income-tax Officer is a part of his assessment order, then the Appellate Assistant Commissioner clearly has the authority to go into this question and issuance of the impugned notice cannot be successfully challenged. To get over this difficulty, learned counsel for the petitioner contended that the note appearing at the end of the original order of assessment passed by the Income-tax Officer did not appear to be a part of the assessment order inasmuch as the same was not included in the copy of the order given to the petitioner after making the assessment. We are unable to accept this contention in view of the abundant intrinsic evidence on the record to support the authenticity of the original assessment order of the Income-tax Officer of which this note forms a part. Admittedly, the assessee (petitioner) was required by the Income-tax Officer to show cause why the income from Vimala Nursing Home should not be treated as her individual income and in reply to the query from the ITO and she having filed
a reply thereto, the Income-tax Officer’s conclusion thereon had to form a part of the assessment order made later on the same day. The conclusion is that the note contained at the end of the assessment order considering this aspect forms a part of the assessment order and is clearly in consonance with the probabilities of the case as well as the ordinary presumption that all official acts are properly done. There is thus no cogent material to support the only argument advanced in support of this petition.
7. It is obvious that on the above conclusion, the impugned notice was given by the Appellate Assistant Commissioner within the scope of his authority given by Section 251(1)(a) of the Income-tax Act, 1961. There is thus no ground to quash the same.
8. Consequently, the petition is dismissed. In the circumstances of the case, there will be no order as to costs. The security amount, if any, be refunded to the petitioner.
