INCOME TAX ACT, 1961

Section 251(1)

Appeal [CIT(A)] - Powers of CIT(A) - Enhancement of assessment on a new source of income -

AO completed assessment after making only disallowance under section 14A read with rule 8D. Aggrieved, assessee carried the matter in appeal. CIT(A) deleted addition made under section 14A nevertheless he enhanced assessment by disallowing salary expenses claimed by assessee. Assessee challenged this on the ground that CIT(A) had no jurisdiction to make enhancement on a new source of income. Held: Power of CIT(A) as regards enhancement is restricted to the subject-matter of assessment or the sources of income which have been considered expressly or by clear implication by AO from the point of view of taxability. In assessee's case, AO made statutory disallowance under section 14A. Under the circumstances, disallowance of salary was enhancement of income from a new source which was not considered by AO. Thus, enhancement of assessment by CIT(A) on a new source of income could not be upheld.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14

INCOME TAX ACT, 1961

Rule 34(5)(c)

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