TMI Blog1967 (11) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... amount was, however, debited to an account headed " staff account ", appearing as reserve in the balance-sheet. In the aforesaid circumstances, the Income-tax Officer made the assessment without considering the question of allowability of the expenditure. The assessee preferred an appeal before the Appellate Assistant Commissioner and there claimed deduction of the said sum of Rs. 12,000 from the computation of the total income. The Appellate Assistant Commissioner allowed the claim with the observation : " As the amount was allowed by the Income-tax Officer himself in earlier years and as the pension payment is to the same gentleman, the amount is allowed in computing the appellant's business income. The appellant therefore gets a reduction of Rs. 12,000 ". Aggrieved by the order of the Appellate Assistant Commissioner the revenue appealed before the Appellate Tribunal. The Tribunal allowed the appeal with the observation : " The amount in question, namely, Rs. 12,000, was not claimed in the return and it was not debited in the profit and loss account. The Income-tax Officer had no occasion to consider the allowability thereof. In the circumstances, the assessee had no r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on the power of the Tribunal has been indicated in Pokhraj Hirachand v. Commissioner of Income-tax in the following language : " Rule 12 of the aforesaid Rules (meaning Appellate Tribunal Rules) provides 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, 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 the Tribunal under this rule. Rule 27 provides that the respondent, though he may not have appealed, may support the order of the Appellate Assistant Commissioner on any of the grounds decided against him : It is well settled that the expression ' thereon ' occurring in sub-section (4) of section 33 means on the subject-matter of the appeal before the Tribunal. Reading these rules together with sub-section (4) of section 33, it is clear that the subject-matter of appeal before the Tribunal is the grounds of appeal raised by the appellant in his memorandum of appeal, the grounds which the Tribunal allows him to raise under rule 12, and the contentions raised by the respondent before the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the limits of the powers of the Appellate Assistant Commissioner to enhance the assessment has been accepted by the legislature as the true exposition of the words of the section. If it were not, one would expect that the legislature would have amended section 31 and specified the other intention in express words. " We need remind ourselves of the aforesaid interpretation put on sections 33 and 31 of the Indian Income-tax Act, in order to appreciate the arguments addressed by the learned counsel appearing for the parties. Mr. K. K. Roy, learned counsel for the assessee, submitted that the memorandum of appeal before the Appellate Tribunal consisted of one ground only, namely : " The Appellate Assistant Commissioner erred in law and facts in allowing the sum of Rs. 12,000 towards payment of pension. " According to him, that ground did not include the point that the appeal before the Appellate Assistant Commissioner was incompetent. What he meant to argue was that the subject-matter of appeal before the Tribunal was not whether the Appellate Assistant Commissioner had jurisdiction or competency to entertain the appeal, on the question of allowability of a sum of Rs. 12,000 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31 of the Act and the Appellate Assistant Commissioner cannot be condemned for having entertained the claim for consideration. Question No. 1 is somewhat oddly worded. There is no procedure for admission of an appeal before an Appellate Assistant Commissioner. If an appeal is not maintainable in law or barred under the provision of the Act, the maintainability of the appeal may be disputed before the appellate court. The maintainability of the appeal was not disputed before the Appellate Assistant Commissioner. The ground of appeal before the Appellate Tribunal was also not very revealing. That ground we have quoted hereinbefore. It is not, however, impossible to read in the ground objection against the maintainability of the appeal. The ground says that the Appellate Assistant Commissioner erred in allowing the sum of Rs. 12,000 towards payment of pension. Now, an error may be manifold. In a case where the proper procedure is to remand a claim, for the first time made before the Appellate Assistant Commissioner, to the Income-tax Officer for consideration, then to allow the claim forthright is a procedural error. There is no difficulty in including the question of procedural er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r had always the right to consider. Mr. Sabyasachi Mukherji, learned counsel for the revenue, however, placed strong reliance on the briefly reported judgment of the Supreme Court in Commissioner of Income-tax v. Rai Bahadur Hardutroy Motilal and submitted that there was nothing in the return filed by the assessee claiming deduction. There was also nothing in the assessment order showing consideration by the Income-tax Officer about the admissibility of the expenditure. That being the position, he submitted, the Appellate Assistant Commissioner would have no power to allow the expenditure, because he should not consider anything not considered by the Income-tax Officer. In the same line of reasoning he contended that the Tribunal was right in dismissing the appeal as done in this case. In our opinion, Mr. Mukherji is not right. Nothing debars an assessee in making a new claim for deduction before the Appellate Assistant Commissioner. Nothing prevents the Appellate Assistant Commissioner, prima facie, to examine the force of such a claim. If prima facie satisfied about the maintainability of such a claim the Appellate Assistant Commissioner may remand the matter to the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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