A. Pasayat, J.:— Since these references relate to one common judgment of the Tribunal and the statement of the case drawn up by the Tribunal is a common one, we are disposing of them by this common judgment.

2. At the instance of the Revenue, the following question has been referred for adjudication under section 256(1) of the Income-tax Act, 1961, (in short, “the Act”), by the Income-tax Appellate Tribunal, Cuttack Bench, Cuttack (in short, “the Tribunal”).

“Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the Income-tax Officer had no jurisdiction to consider in a set aside assessment any different source of income not considered in the original assessment?”

3. The background facts as detailed in the statement of the case are to the following effect:

The assessment years involved are 1970–71, to 1974–75 for which the late S.V Divakar (hereinafter referred to as “the assessee”) had filed returns. After his death, his legal heir, Sri Kumar Nair, was substituted. The assessee had filed his returns in respect of the income derived from execution of civil contract works. The assessments for these years were completed by the Income-tax Officer under section 143(3) of the Act. The assessee challenged the correctness of the assessments in appeal before the Appellate Assistant Commissioner of Income-tax (in short, “the AAC”). The challenge related to the estimate Of gross receipts and disallowance of expenses. The Appellate Assistant Commissioner set aside the assessments with the following observations:

“On going through the assessment orders, it appears that the assessments were completed by the Income-tax Officer ignoring the evidence produced by the appellant. The assessments are, therefore, set aside with the direction to complete them afresh as per law after giving a reasonable opportunity of hearing to the appellant.”

4. While the assessments were pending before the Assessing Officer, he received another order of the Appellate Assistant Commissioner, Sambalpur, relating to the assessee's wife, Smt. D. Saraswati Amma.

5. By the said order, the Appellate Assistant Commissioner had set aside the assessment with the observation that he considered that the truck was purchased by her husband and the contract work was executed by him and, therefore, the entire income ought to be assessed in his hands. In essence, Smt. D. Saraswati Amma's assessments were set aside with the direction to make further investigation in the light of the discussions made and to complete the same afresh as per law. While completing the assessments of the assessee afresh, the Income-tax Officer held that the income of his wife from the truck in respect of which returns were filed separately before the Income-tax Officer was to be included in his income, as he carried on benami business in the name of his wife. The inclusion of the wife's income was assailed by the assessee before the Appellate Assistant Commissioner. The primary stand taken was that the Assessing Officer had no jurisdiction to consider in a set aside assessment any source of income which was not considered in the original assessment, as it did not form part of the direction of remand. The plea found acceptance by the Appellate Assistant Commissioner who directed the Income-tax Officer to exclude the income of the assessee's wife for each of the assessment years concerned. The consolidated order of the Appellate Assistant Commissioner was assailed in appeals before the Tribunal on the ground that the Appellate Assistant Commissioner was not justified in directing the exclusion of income. The Tribunal affirmed the conclusions of the Appellate Assistant Commissioner, and on being moved, the references have been made.

6. Mr. A.K Ray, learned counsel for the Revenue, urges that, when the assessment is set aside without imposing any restrictions or limitations as to how the fresh proceedings are to be conducted by the Assessing Officer, the Assessing Officer has the same power in making such fresh assessment as he originally did when making the assessment under section 143(3), and, therefore, the Assessing Officer was competent to re-do the assessment in accordance with law after taking into account all matters that would be relevant for the purpose of assessment. Since the Assessing Officer was investigating into the taxability of income shown in Smt. Saraswati Amma's account pursuant to the direction given by the Appellate Assistant Commissioner, the inclusion was in order.

7. There was no appearance on behalf of the assessee when the reference applications were taken up for hearing. Considering the importance of the point, we requested Mr. Arjun Agarwalla to assist us. He, with his usual fairness, has placed before us several decisions of various High Courts on the point.

8. Wherever an assessment is set aside without imposing any restrictions or limitations, the Assessing Officer has the same power for making the assessment afresh as he could have originally done. In such a case, all matters and aspects that have relevance can be considered. A difficulty arises when the assessment has been set aside with a specific direction and the Assessing Officer stumbles upon a new source which was not noticed by him while making the original assessment. The information relating to such new source may be on various accounts, for example, the direction by the appellate authority in another case, revelation due to any investigation. There may be so many other circumstances, on account of which the information may come into the possession of the Assessing Officer. In such a case what would the Assessing Officer do is the question. Can he ignore the information and restrict the assessment to the direction given by the appellate authority, or can he take note of information and make the assessment? It may be pointed out here that the Assessing Officer cannot take recourse to reopen the assessment under section 147 of the Act, because the assessment is yet to be completed. In CIT v. Rai Bahadur Hardutroy Motilal Chamaria, [1967] 66 ITR 443, it was observed by the apex court that, while deciding an appeal from an order passed by the Assessing Officer, the Appellate Assistant Commissioner has no jurisdiction to assess a source of income which has not been processed by the Assessing Officer and which is not disclosed either in the return filed by the assessee or in the assessment order and the Appellate Assistant Commissioner, therefore, cannot travel beyond the subject-matter of the assessment. Consequently, the Appellate Assistant Commissioner, while setting aside the assessment, cannot empower the Assessing Officer to go into points which he himself could not have investigated in exercise of his power of enhancement. While the Appellate Assistant Commissioner could not have empowered the Assessing Officer to assess a source of income not processed in the original order of assessment and not disclosed either in the return or in the assessment order, it is difficult to appreciate as to how the Assessing Officer could assume jurisdiction to tax that new source of income while making a fresh assessment in pursuance of an order of remand. The power to enhance, if it existed, was confined to the old sources of income which were the subject-matter of appeal to the appellate authority. This principle applies where there is a specific direction given in the order of remand relating to any particular source. Where, however, the remand is an open one, the Assessing Officer shall not be restricted to any particular source and all the relevant aspects can be taken into consideration by him including any new source of income which was not the subject-matter of assessment earlier. It would, therefore, depend upon the nature of the order of remand. In the instant case, the Appellate Assistant Commissioner, on the first occasion, had set aside the assessment restricting the consideration to the evidences already produced by the assessee. Mr. Ray, for the Revenue, submits that the direction was to complete the assessment afresh after giving a reasonable opportunity of hearing to the assessee. According to him, the direction clearly indicated an unbridled remand. In our view, the direction is being read out of context. The same cannot be read in isolation. The operative portion of the order of the Appellate Assistant Commissioner has been quoted by us supra, which is very specific and cannot be held to be an unrestricted or open remand.

9. To put if in short, the scope of fresh assessment following the appellate order depends on the subject-matter of the appeal and the appellate order read as a whole in its proper context. In the facts of the case at hand, the order of the Appellate Assistant Commissioner on the first occasion related to specific challenges by the assessee-appellant. In that view of the matter, the Tribunal was justified in holding that the Assessing Officer could not have travelled beyond the direction given by the Appellate Assistant Commissioner. The case of the Revenue, however, is that if that would be the construction, no effect can be given to the Appellate Assistant Commissioner's order in the assessee's wife's case. That apprehension is unfounded. After the assessment is made, the assessment can be reopened under section 147 in order to give effect to the appellate order in regard to a source of income which was not available to be assessed or which did not form part of the adjudicatory process while making the original assessment. In a given case, the Commissioner can also exercise power under section 263, if the requisite conditions are satisfied.

10. We, accordingly, answer the references made to us in the affirmative, in favour of the assessee and against the Revenue. No costs.

S.K Mohanty, J.:— I agree.