Facts

The AO made an addition on account of cash credits during the relevant assessment year. In the appeal before the Tribunal, while the amount of addition was reduced, the income of the relevant assessment year and the preceding assessment year was clubbed to an even figure of Rs. 1,00,000. It  was  noted  that the assessee undertook to file a voluntary return of income, based on the Tribunal’sfindings.

Issue

Can the Tribunal give findings pertaining to an assessment year not covered by   the appeal?

Views

The assessee argued that the addition made by the Tribunal was with the consent  of the parties. Therefore, no grievance can be raised before the Court. The department argued that there was no sanction in law permitting the Tribunal to give findings pertaining to an assessment year, other than the year, which is the subject matter of an appeal before it.

Held

The Supreme Court held that the approach adopted by the Tribunal  was incorrect.   It was only permitted to give directions pertaining to the assessment year before    it, and not pertaining to any other year. Further, the manner in which the income for the two years was clubbed on an ad hoc basis was not justifiable. (AY. 1953-54) (CA No. 2459 of 1966 dt. 14-2-1969)

Editorial : Section 150 of the Income-tax Act, 1961 does provide for a situation where the Tribunal can give findings pertaining to an assessment year other than the year before it. The corresponding provision under the Indian Income-tax Act, 1922 was the second proviso to section 34(3). However, this provision was not considered by the Supreme Court.

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– Mahatma Gandhi