Ajit K. Sengupta, J. - (1.) In this reference under Section 256(2) of the Income-tax Act, 1961, for the assessment year 1963-64 at the instance of the Commissioner, the following question of law has been referred to this court ; " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the action of the Appellate Assistant Commissioner in making enhancement of the assessment by addition of Rs. 3,13,675 for the assessment year 1963-64 is not tenable ? " Shortly stated, the facts are that the assessee is engaged in the manufacture and sale of jute goods and derived income therefrom. The Income-tax Officer made the assessment on May 26, 1963, under Section 143(3). Besides making some disallowance of the expenses, he added a sum of Rs. 10,85,820 in the computation of the total income on the ground that there was a change in the method of valuation of the closing stock. It was contested by the assessee in appeal before the Appellate Assistant Commissioner. He deleted the addition in regard to the valuation of the closing stock and allowed relief in respect of a few other items that were being disputed. It transpired that, during the year ending October 31, 1961 (relevant to the assessment year 1962-63), the assessee had entered into forward contract with some parties for the supply of raw jute and some of them defaulted to supply as there was a steep rise in price. The assessee had put up claims for damages on the difference between the market price on the date of supply and the contract prices. There were awards made ex parte arid decrees were obtained thereon in the High Court. These decrees came to be passed between 1962 and 1964. The Income-tax Officer had added a sum of Rs. 11,12,333 being the aggregate of such claims in the assessment year 1962 63. The assessee had appealed against the same to the Appellate Assistant Commissioner who deleted a part of the income holding that such income had not accrued in the year relevant to the assessment year 1962-63, That order was made on March 10, 1969. He was of the view that income would accrue on the date of the decrees. Therefore, according to him, income would have accrued for 1963 64. In view of this, the Appellate Assistant Commissioner dealing with the appeal for 1963 64 issued a notice to show cause why an enhancement should not be made. On the ground that no objection was raised, he added an amount of Rs. 3,18,573.
(2.) Before the Tribunal, this action was contested. It was urged that such a source of income had not appeared in the accounts maintained or in the return filed and neither had it been mentioned or considered by the Income-tax Officer in his assessment order and, therefore, the action of the Appellate Assistant Commissioner was without jurisdiction and beyond the powers conferred under Section 251 of the Income-tax Act, 1961,
(3.) The Tribunal held that the observations made by the Supreme Court in CIT v. Rat Bahadur Hardutroy Motilal Chamaria, squarely applied to the facts and circumstances of this case in relation to Section 251 of the Income-tax Act, 1961, and, therefore, the action of the Appellate Assistant Commissioner was not tenable and was unsup-portable. The addition sustained by him was thus deleted.;