D.K. Kapur J.
1. This application under section 256(2) relates to the assessment year 1962-63. As many as 14 questions were said to arise out of the Tribunal's order in appeal. The Tribunal rejected the application under section 256(1) stating that some of the questions did not arise and some of them were factual questions and at least 2 or 3 questions are covered by judgments of the Supreme Court and were academic.
2. We have examined the case in great detail. The first 7 questions sought to be raised relate to the initiation of proceedings under section 147(a) of the Income-tax Act, 1961. The facts of the case are that there was a raid on the applicant's business place in September, 1967, but nothing was discovered. However, some account books referred to as uchanti account books were handed over by some munims of the assessed to the Central Bureau of Investigation. These books were handed over before the raid. They came into the possession of the investigation wing of the Income-tax Department. At some stage, it appears that the Income-tax Officer concerned recorded reasons why the assessment proceedings for the year 1962-63 should not be reopened by resort to section 147(a). Unfortunately, those reasons were not available when the Tribunal heard the appeal. The reasons were referred to in the order of the Commissioner of Income-tax (Appeals) who stated that they had referred to the uchanti books. These reasons were apparently recorded on March 3, 1970. The assessed's case was that no reasons were recorded but the Income-tax Officer had acted only on the directions of the Deputy Director of Investigation in the Income-tax Department. This contention was not accepted. It was held by the Tribunal that the reasons existed as they had been referred to by the Commissioner of Income-tax (Appeals) and it appeared that the Income-tax Officer had applied her own mind. We have examined this question from various points of view to determine whether any question of law arises. For one thing, there was no contention before the Income-tax Officer to the effect that the proceedings were not validly taken under section 147(a); nor was any writ petition filed which might have led to the production of the relevant documents before the court. This point appears to have been raised before the Commissioner of Income-tax (Appeals) for the first time who noted the reasons and also the report and other circumstances and held that the proceedings had been validly taken. This was formulated as a finding of fact by the Tribunal with a view that no question of law arises. It has been urged by the learned counsel that the uchanti books were nevertheless (sic) before the Income-tax Officer before the reasons were recorded or the action under section 147(a) was taken. We think that this is unlikely keeping in view the reasonable and common course of events. The law requires that the books when seized should be sent to the Income-tax Officer and we see no reason why the books should not come in this particular case to that officer as the books are of no utility to anyone else. We, thereforee, think that the first 7 questions do not arise as questions of law in this particular case.
3. The other questions deal with other aspects of the case. Questions 8, 9 and 10 are concerned with the way in which the credit entries occurring in the duplicate set of uchanti books were dealt with by the Income-tax Officer and the Commissioner (Appeals). The Income-tax Officer had held that the gross peak credit occurring in every concealed account had to be clubbed to determine the extent of concealed income. Acting on this, he had added the maximum credit occurring in each account to reach an amount of Rs. 3,41,724. He had added some other amount in some other accounts also as concealed income. The Commissioner (Appeals) analysed the very same entries in quite a different manner. He rightly held that the peak credit occurring in each account could not be clubbed together as the peaks were not on the same day. However, he took the maximum credits, clubbed them together and the maximum debits and clubbed them together and he found that the maximum clubbed credits were less than the maximum clubbed debits. So he held that there was no influx into the accounts, leading to an inference that no amount could be added as an unexplained credit. However, he came to the conclusion that the extra entries occurring in the books were not without meaning or sense. They were really representative of concealed business transactions which had not been entered in the books. From this reasoning, he inferred that a particular rate of profit had to be applied to the total sum. He added on that account, Rs. 32,500 as additional income from the ghee business. it is urged on behalf of the assessed that this raises a. question of law because a new source cannot be created by the Commissioner (Appeals). A number of judgments were cited before us, but we think they are all not applicable to the facts of this case.
4. For one thing, the source of income in this case is the same as the source of income in respect of other income. The assessed was doing ghee business and the Commissioner of Income-tax (Appeals) has treated the extra entries as showing that they were further transactions in the business outside the original books. There was thus no new source. In addition, no new material at all was referred to by the Commissioner of Income-tax (Appeals). It was an inference from pre-existing facts on record. An appeal is by its nature a rehearing of the original proceedings. The Commissioner of Income-tax (Appeals) reconsidered the same material as was considered by the Income-tax Officer and reached a different conclusion. This is within the scope of the appellate power and is not covered by the judgments stating that the power of enhancement given to the Commissioner (Appeals) by section 251 does not enable him to refer to a new source of income. Then again, there is no enhancement involved in this case. It is actually a reduction. So we think that these questions of law do not arise and they are really conclusions of fact based on the evidence before the Income-tax Officer and, as reconsidered by the Commissioner of Income-tax (Appeals) was, affirmed by the Tribunal.
5. It may be useful to add that question No. 10 deals with alleged double taxation by treating the same entries as business transactions as well as for the purpose of interest income but we are not able to find any facts showing that this question arises either from the Commissioner of Income-tax (Appeals) order or the Tribunal's order.
6. The other questions sought to be raised do not also raise any referable question of law. So we dismiss this petition but leave the parties to bear their own costs.