(1) In disposing of an appeal, the Appellate Income Tax Authority may—

(a) in the case of an order of assessment, confirm, reduce, enhance, set aside or annul the assessment;

(b) in the case of an order imposing a penalty, confirm, set aside or cancel such order or vary it so as either to enhance or to reduce the penalty; and

(c) in any other case, pass such order as the authority thinks fit.

(2) An order of assessment or penalty shall not be set aside except in a case where the Additional Commissioner of taxes (Appeals) or the Commissioner (Appeals) is satisfied that a notice on the assessee has not been served in accordance with the provisions of section 335.

(3) The Appellate Income Tax Authority shall not enhance as assessment or a penalty or reduce the amount of refund unless the appellant has been given a reasonable opportunity of showing cause against such enhancement or reduction.

(4) The order of the Appellate Income Tax Authority disposing of an appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for the decision.

(5) Where, as a result of an appeal, any change is made in the assessment of a firm or an association of persons, the Appellate Income Tax Authority may direct the Deputy Commissioner of Taxes to amend accordingly any assessment made on any partner of the firm or any member of the association.

(6) On the disposal of an appeal, the Appellate Income Tax Authority shall communicate the order passed by him to the appellant, the Deputy Commissioner of Taxes and the Commissioner within 30 (thirty) days of the passing of such order.

(7) Notwithstanding anything contained in this Act, an appeal to the Appellate Income Tax Authority shall be deemed to have been allowed if the Appellate Income Tax Authority fails to make an order thereon within 150 (one hundred and fifty) days from the end of the month on which the appeal was filed.