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2016 (9) TMI 820 - PUNJAB AND HARYANA HIGH COURT

2016 (9) TMI 820 - PUNJAB AND HARYANA HIGH COURT - [2016] 389 ITR 326 - 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 .....

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hall 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. Moreo .....

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ficient 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 .....

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2015 - Dated:- 16-9-2016 - MR. S. J. VAZIFDAR AND MR. DEEPAK SIBAL, JJ. For The Appellant : Mrs. Radhika Suri, Senior Advocate with Ms. Rinku Dahiya, Advocate For The Respondent : Mr. Rajesh Katoch, Advocate DEEPAK SIBAL, J. : The present appeal under Section 260-A of the Income Tax Act, 1961 (for short - the Act), which pertains to the Assessment Year 2007-08, is at the instance of the assessee impugning therein the order passed by the Income Tax Appellate Tribunal, Division Bench, Chandigarh .....

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ircumstances of the case order of the ITAT is contrary to the ratio of the Apex Court in the case of National Thermal Vs. CIT 229 ITR 383 ? The answer to either of the afore-quoted questions would answer the other. For the Assessment Year in question, through order dated 29.12.2009, the assessee was assessed to tax, which order was challenged by the assessee through an appeal filed before the Commissioner of Income Tax, Ludhiana (for short - the Commissioner), which was partly allowed. This led .....

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before the Commissioner, the Tribunal refused to adjudicate upon the same as according to the Tribunal prior leave of the Tribunal through an application in writing should have been obtained before raising the additional ground. An oral request made by the assessee to raise this additional ground was not considered enough. The Tribunal held that in the absence of any request in writing for admission of an additional ground in the appeal, the Revenue would be put to serious prejudice as it would .....

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me Tax [2007] 293 ITR 234 (P&H). Appeals to the Tribunal are preferred under Section 254(1) of the Act which provides that after hearing the contesting parties the Tribunal may pass such orders that it thinks fit. Section 254(1) of the Act, reads as under: - 254 (1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. In the afore-quoted provision the usage of the words pass such orders thereon as it .....

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ive that the powers of the Tribunal, while considering an appeal under Section 254 (1) are not restricted only to the issues raised before it. Rules 11 and 29 read as under:- 11. Grounds which may be taken in appeal.- 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, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of t .....

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or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them, or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced. Rule 11 of the Rules provides that the app .....

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any witness or any affidavit to be filed, it can, for reasons to be recorded, do so. A harmonious reading of Section 254 (1) of the Act and Rules 11 and 29 of the Rules coupled with basic purpose underlying the appellate powers of the Tribunal which is to ascertain the correct tax liability of the assessee leaves no manner of doubt in our minds that the Tribunal while exercising its appellate jurisdiction would have the discretion to allow to be raised before it new or additional questions of l .....

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he assessee, held as under :- 5. Under Section 254 of the Income-tax Act, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result o .....

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ommissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. 6. In the case of Jute Corporation of India Ltd. v. C.I.T. . this Court, while dealing with the powers of the Appellate Assistant Commissioner observed that an appellate authority has all the powers wh .....

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ication of the order of assessment passed by the Income-tax Officer. This Court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The Appellate Assistant Commissioner must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the .....

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ill have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. 8. The reframed question, therefore, is answered in the affirmative, i.e., the Tribunal has jurisdiction .....

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had not been raised earlier. The view that the Tribunal would be confined to decide only the issues arising out of the appeal before the Commissioner was a view, which was considered to be too narrow and thus, the Tribunal was held to have powers to allow or not to allow a new ground to be raised before it for adjudication. It further held that where the Tribunal was only required to consider a question of law arising from the facts, which were already on record in the assessment proceedings, su .....

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nsider a question of law arising from the facts which are on record in the assessment proceedings, it is necessary to consider that a question in order to correctly assess the tax liability of an assessee. The reason is obvious. Where disputed questions of facts are involved, it would unnecessarily delay the assessment proceedings and may in certain circumstances place an unfair burden upon the Revenue such as when the proceedings have been pending for a long period of time and it is difficult t .....

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n in preventing the assessee from raising the additional point. The judgment of the Apex Court in National Thermal's case (supra) was considered and followed by this Court in Avery Cycle Industries Ltd. vs. Commissioner of Income Tax - (2007) 292 ITR 493 (P&H), wherein it was held as under :- 4. When the facts raised in the instant appeal are examined in the light of the principle laid down by the Hon'ble Supreme Court, then no doubt it felt that all the facts relevant to the additio .....

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ets in respect of old as well as new units of Pahwa Steel and Tube Mills (P. S. T. M.), a unit of Avery Cycle Industries Ltd., has not been brought forward correctly from the preceding assessment year. 5. In view of the above, the impugned order dated 29-10- 2004, (annexure A-l) passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, is hereby set aside and the Tribunal is directed to deal with the aforementioned additional ground in accordance with law. To the same effect is .....

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order impugned before us none of the above referred judgments were noticed by the Tribunal. The Tribunal referred to the following observations of the judgment of Gujarat High Court in Smt. Arundhati Balkrishna and others v. G.M.Singhvi, Income Tax Officer, Group Circle-III-2, Ahmedabad and others [1976] 103 ITR 763:- …………where, in an appeal to the Appellate Assistant Commissioner by the assessee against an order of assessment, the assessee has not questioned the dec .....

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e observations are contrary to the judgment of the Supreme Court in National Thermal Power Co. Ltd. case (supra). Infact the Full Bench of the Bombay High Court in Godavari Sugar Mills Ltd. case (supra) dealing with Rule 11 observed as under:- 19. In this connection a reference may also be made to the Income Tax (Appellate Tribunal) Rules, 1963 which have been framed under section 255(5) of the Income Tax Act, 1961. Under Rule 11 of the Appellate Tribunal Rules the appellant shall not, except by .....

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e appeal the Tribunal is not restricted to the grounds which are taken or which have been allowed to be taken in the memorandum of appeal. In our view Rule 11 infact supports the assessee and not the department. Rule 11 infact 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 .....

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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 o .....

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to any disputed questions of fact. In Sahara India's case (supra), which was also relied upon by the Tribunal, the Tribunal had permitted an additional ground to be raised and the issue decided by the Court was with regard to how the Tribunal should have proceeded thereafter. The Tribunal ought to have considered the judgment as a whole and ought not to have relied upon the head note alone. The judgment infact supports the assessee. As noted in the opening paragraph the Tribunal had admitte .....

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ssioner of Income Tax (Appeals) and remanded the case to him for deciding the appeal afresh rather than to decide the same on the merits for the first time by itself. Upon remand the CIT(A) would have been in a position to examine the issue for the first time in relation to the additional ground. In any event, the observation that the Tribunal had overlooked the fact that the ground did not arise from the order of the CIT(A) is not in accordance with the judgment of the Supreme Court. The judgme .....

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