The assessee was engaged in the business of civil contract. The AO made three additions. On the assessee’s appeal, the CIT(A) enhanced income of appellant by Rs. 26.50 lakhs which included disallowances of Rs. 11.50 per cent being 50 per cent of wage expenses claimed in profit and loss account and Rs. 15 lakhs being 50 per cent of sundry creditors appearing in balance sheet. On second appeal, the Tribunal dismissed the appeal of the assessee.

On further appeal, the High Court set aside the order of both the CIT(A) and the Tribunal and restored the proceedings for consideration before the CIT(A) In compliance of the said order, the assessee filed an application along with relevant documents. The CIT (A) partly allowed the appeal of the assessee. However, the additions of Rs.11.50 lakhs and Rs.15.00 lakhs were confirmed. On appeal, the Tribunal confirmed the addition of amount of sundry creditors to extent of Rs.15.00 lakhs, and disallowance on labour charges of Rs.5.95 lakhs. On appeal the assessee contended that the AO had made three additions which were deleted by the CIT(A) However, addition of Rs. 11.50 lakhs and Rs. 15 lakhs towards labour expenses and sundry creditors were wrongly made by the CIT (A) as he did not have the jurisdiction to introduce a new source of income and the assessment was to be confined to those items of income which was subject matter of the appeal. The Court held that the argument raised by the assessee that the CIT(A) while exercising power of enhancement under S.  251 consider new source of income which was not dealt by the Assessing Officer, in the instant case cannot be accepted as after the remand by the instant Court, the CIT(A) as well as the Tribunal in depth had recorded a finding that there was no new source of income on which the additions had been made and it was all on the records produced before the AO that the CIT(A) had made additions of labour charges as well as addition of sundry creditors to the extent of Rs. 15.00 lakhs.  Court held that instant case is not of new source of income as the CIT(A) has relied upon the books of account submitted by the assessee along with his return and had claimed expenditure made by him in profit and loss account and claim of sundry creditors shown in balance-sheet. Court also held that The Apex Court while dealing with the power of the Appellate Assistant Commissioner under section 251 in case of CIT v Nirbheram Deluram [1997] 91 Taxman 181/224 ITR 610 (SC) and Jute Corpn of India v. CIT [1990] 53 Taxman 85/[1991] 187 ITR 688 (SC) had held that power of the Appellate Assistant Commissioner is coterminous with that of Income Tax Officer and he can do what the Income Tax Officer can do and also direct him to do what he has failed to do.

As regards the issuance of fresh notice of enhancement by the CIT(A) is concerned, has no relevance, once the order of the Tribunal as well as CIT(A) was set aside by the instant Court restoring the appeal back to the CIT(A) for reconsideration and fixing last date for the appellant to file all required information and documentary material and to appear before the CIT(A) on scheduled date. The question of law raised by the assessee is of no consequence as he, thereafter, had filed the documents before the CIT(A) and had appeared, thus, the question of issuance of fresh notice for enhancement does not arise and the CIT (A) rightly decided the question so raised before it. Accordingly the appeal is dismissed. (AY. 2006-07)