2016 (9) TMI 820 - HC - Income Tax

Additional grounds of appeal - whether , the Income Tax Appellate Tribunal was correct in law in holding that the Grounds of Appeal raised before the ITAT could not be entertained as it was not raised as additional grounds of appeal without seeking leave of the court even though the same was part of grounds of appeal filed before the ITAT by the Appellant ? - Held that:- Rule 11 confers wide powers on the Tribunal, although it requires a party to seek the leave of the Tribunal. It does not require the same to be in writing. It merely states that the appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal. In a fit case it is always open to the Tribunal to permit an appellant to raise an additional ground not set forth in the memorandum of appeal. The safeguard is in the proviso to Rule 11 itself. The proviso states that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground. Thus even if it is a pure question of law, the Tribunal cannot consider an additional ground without affording the other side an opportunity of being heard. We venture to state that even in the absence of the proviso it would be incumbent upon the Tribunal to afford a party an opportunity of meeting an additional point raised before it. Moreover, even though Rule 11 requires an appellant to seek the leave of the Tribunal, it does not confine the Tribunal to a consideration of the grounds set forth in the memorandum of appeal or even the grounds taken by the leave of the Tribunal. In other words the Tribunal can decide the appeal on a ground neither taken in the memorandum of appeal nor by its leave. The only requirement is that the Tribunal cannot rest its decision on any other ground unless the party who may be affected has had sufficient opportunity of being heard on that ground.

In the present case the Tribunal ought to have exercised its discretion especially in view of the fact that the assessee intends raising only a legal argument without reference to any disputed questions of fact.

In view of the afore-referred statement made by learned senior counsel appearing on behalf of the appellant-assessee that for the decision on the new ground raised by the assessee, no additional evidence would be led and that such question arose from the facts which were already on the record of the assessment proceedings and further being convinced that a decision upon the new ground raised by the assessee would only help in determining the assessee's correct tax liability, after setting aside the impugned order, we remand the matter to the Tribunal for adjudicating upon the additional ground on merits. The Tribunal would be at liberty to remand the matter further, if it so deems fit.