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Issues:
- Whether the Appellate Assistant Commissioner was justified in rejecting an additional ground raised by the assessee in an appeal? - Whether the Income-tax Appellate Tribunal was correct in setting aside the Appellate Assistant Commissioner's order and directing him to entertain the additional ground? Analysis: The case involved a dispute regarding the rejection of an additional ground raised by the assessee in an appeal before the Appellate Assistant Commissioner. The assessee had moved an application under section 154 of the Income-tax Act, 1961, seeking relief under section 80J due to a discrepancy in the value of assets considered for computation. The Income-tax Officer rectified the mistake but also revised the relief under section 80J by withdrawing excess deduction allowed. An appeal was made to the Appellate Assistant Commissioner, who rejected the contention regarding the deduction of a liability not originally raised in the appeal grounds. The assessee challenged this decision before the Income-tax Appellate Tribunal, arguing that the additional ground should have been considered by the Appellate Assistant Commissioner. The Tribunal found that the new ground raised was a question of law and should have been entertained and decided on its merits. The Tribunal directed the Appellate Assistant Commissioner to reconsider the additional ground. However, the Appellate Assistant Commissioner's discretion to allow new grounds is subject to certain conditions under section 250(5) of the Act, as highlighted in relevant case law. The High Court emphasized the importance of satisfying the conditions under section 250(5) before allowing additional grounds in appeals. It was noted that the Tribunal did not determine if the omission of the ground from the appeal was wilful or unreasonable, as required by law. The High Court held that without such a finding, the Tribunal was not justified in setting aside the Appellate Assistant Commissioner's order and directing the consideration of the additional ground. Additionally, the High Court referred to specific provisions and case law regarding the limited jurisdiction in rectification proceedings and the exclusion of borrowed capital while computing relief under section 80J. The High Court concluded that the Tribunal's decision was not in line with the statutory requirements, and the matter was remanded for proper consideration in accordance with the law. The judgment favored the Revenue and directed the Tribunal to hear the case based on the High Court's decision.
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