TMI Blog1990 (9) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ts income for purposes of charging tax. The Appellate Assistant Commissioner permitted the assessee to raise the additional ground and after hearing the Income-tax Officer, he accepted the assessee's claim and allowed deduction of Rs. 11,54,995 in computing the total income of the assessee for the assessment year 1974-75. The Revenue preferred an appeal before the Income-tax Appellate Tribunal. The Tribunal held that the Appellate Assistant Commissioner had no jurisdiction to entertain an additional ground or to grant relief to the assessee on ground which had not been raised before the Income-tax Officer. The Tribunal set aside the order of the Appellate Assistant Commissioner placing reliance on the decision of this court in Addl. CIT v. Gurjargravures P. Ltd. [1978] 111 ITR 1. The assessee made an application before the Tribunal under section 256(1) of the Income-tax Act, 1961, for making reference to the High Court. The Tribunal refused to refer the question on the findings that the question stood covered by this court's decision in Gurjargravures' case [1978] 111 ITR 1. The assessee thereupon approached the High Court under section 256(2) of the Act for calling for a statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision debarring an assessee from raising an additional ground in appeal and there is no provision in the Act placing restriction on the power of the appellate authority in entertaining an additional ground in appeal. In the absence of any statutory provision, the general principle relating to the amplitude of the appellate authority's power being coterminous with that of the initial authority should normally be applicable. But this question, for the purposes of the Income-tax Act, has been an intricate and vexed one. There is no uniformity in judicial opinion on this question. Section 31 of the Indian Income-tax Act, 1922, also conferred power on the Appellate Assistant Commissioner to hear appeals against the assessment order made by the Income-tax Officer. Chagla C.J., of the Bombay High Court, considered the question in detail in Narrondas Manordass v. CIT [1957] 31 ITR 909 and held that the Appellate Assistant Commissioner was empowered to correct the Income-tax Officer not only with regard to a matter which had been raised by the assessee but also with regard to a matter which may have been considered by the Income tax Officer and determined in the course of the assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question with which we are concerned. Power to enhance tax on discovery of new source of income is quite different from granting deduction on the admitted facts fully supported by the decision of this court. If the tax liability of the assessee is admitted and if the Income-tax Officer is afforded an opportunity of hearing by the appellate authority in allowing the assessee's claim, for deduction on the settled view of law, there appears to be no good reason to curtail the powers of the appellate authority under section 251(1)(a) of the Act. In CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225, a three-Judge Bench of this court discussed the scope of section 31(3)(a) of the Indian Income-tax Act, 1922, which is almost identical to section 251(1)(a). The court held as under (at p. 229) : "if an appeal lies, section 31 of the Act describes the powers of the Appellate Assistant Commissioner in such an appeal. Under section 31(3)(a), in disposing of such an appeal, the Appellate Assistant Commissioner may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment ; under clause (b) thereof may set aside the assessment and direct the Income-tax Officer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner who rejected the claim but, on further appeal, the Appellate Tribunal held that since the entire assessment was open before the Appellate Assistant Commissioner, there was no reason for his not entertaining the claim, or directing the Income-tax Officer to allow appropriate relief. On a reference, the High Court upheld the view taken by the Tribunal. On appeal, this court set aside the order of the High Court as it was of the view that the Appellate Assistant Commissioner had no power to interfere with the order 4 of assessment made by the Income-tax Officer on a new ground not raised before the Income-tax Officer and, therefore, the Tribunal committed an error in directing the Appellate Assistant Commissioner to allow the claim of the assessee under section 84 of the Act. Apparently, this view taken by the two-Judge Bench of this court appears to be in conflict with the view taken by the three-Judge Bench of this court in Kanpur Coal Syndicate's case [1964] 53 ITR 225. It appears from the report of the decision in the Gujarat case that the three-Judge Bench decision in Kanpur Coal Syndicate case [1964] 53 ITR 225 (SC) was not brought to the notice of the Bench in the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to admit new grounds or evidence either suo motu or at the invitation of the parties. If he is acting on being invited by the assessee, then there must be some ground for admitting new evidence in the sense that there must be some explanation to show that the failure to adduce earlier the evidence sought to be adduced before the Appellate Assistant Commissioner was not wilful and not unreasonable. This view is reasonable and it finds favour with us. In the instant case, the assessee was carrying on manufacture and sale of jute. For the assessment year 1974-75, it did not claim any deduction of its liability to pay purchase tax under the provisions of the Bengal Raw Jute Taxation Act, 1941, as the appellant entertained a belief that it was not liable to pay purchase tax under the aforesaid Act. But, later on, it was assessed to purchase tax and the order of assessment was received by it on November 23, 1973. The appellant disputed the demand and filed an appeal before the appellate authority and obtained a stay order. The assessee, thereafter, claimed deduction of the amount of Rs. 11,54,995 towards its liability to pay I purchase tax as deduction for the assessment year 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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