INCOME TAX ACT, 1961

Section 251(2)

Appeal [CIT(A)] - Enhancement of assessment - No opportunity of hearing given by CIT(A) to assessee -

CIT(A) directed AO to verify various evidences and submissions made by assessee as regards assessee's investment in shares which were sold during the year and to submit his report in the remand report. AO suggested for disputed addition. On the basis of such suggestion of AO, CIT(A) added the sale consideration of the shares by treating it as unexplained investment. Assessee contended that CIT(A) without following the mandate of section 251(2) could not enhance income. Held: Section 251 empowers CIT(A) to confirm, reduce, enhance or annul the assessment for deciding the appeal against an order of assessment. However, sub-section (2) of section 251 makes it clear that CIT(A) would not enhance assessment unless assessee had reasonable opportunity of showing cause against such enhancement or reduction. The facts available on record did not indicate that before enhancing income of assessee, CIT(A) had issued a show cause notice to assessee as mandated under section 251(2). Revenue was also unable to establish that CIT(A) had complied with conditions of section 251(2). That being case, enhancement of income without following mandatory/statutory requirement could not survive and order of CIT(A) was restored back to CIT(A) for deciding afresh after complying with section 251(2).

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2001-02

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