2014 (9) TMI 1166 - AT - Income Tax

Validity of assessment order u/s 153A - Maintainability new issue raised - Maintainability of the cross-objections preferred by the assessee on the plea that the issue raised in Objections Nos. 1 to 3 is not the part of the first appellate order - Reasons and the bonafide of the assessee for not raising these issues before the authorities below - Held that - Whole purpose of preferring the appeal and the objections and raising new ground for the first time before the appellate authority is to correctly assess the tax liability of an assessee. When there is no need to consider the new facts outside the record for the adjudication of the above issue and undisputedly when those issues are necessary to consider to correctly assess the tax liability of an assessee as per the ratios laid down by the Hon ble Supreme Court in the case of NTPC 1996 (12) TMI 7 - SUPREME COURT there is no reason why such a question should not be allowed to be raised. Referring to the reasons and the bona fide of the assessee for not raising these issues before the authorities below the assessee has been cooperating with the Department since 2009. The assessee for the last six years has been craving for supply of the copy of note of satisfaction which is sine qua non for assuming jurisdiction under sec. 153C of the Act. He pointed that lastly vide letter dated-08.08.2014 the assessee deposited the requisite fee with the request to supply copy of the note of satisfaction in writing but he could not succeed. All these events would prove bona fide and good reasons for raising the above legal plea which goes to the root of the matter. We do no find reason to doubt these explanation of tie assessee. Under these circumstances we are of the view that the legal issues raised in the cross objections for the first time objections before the ITAT have been validly raised by the assessee hence it cannot be said that the cross objections raising those issues for the first time would be amounting to non-maintainability of the cross objections under consideration - decided in favour of assessee

Summary

Issues:
1. Maintainability of cross-objections raised by the assessee before the ITAT.
2. Interpretation of provisions under section 253(4) of the Income-tax Act, 1961 and Rule 22 of the ITAT Rules, 1963 regarding filing cross-objections.
3. Whether a cross-objector can raise an issue before the ITAT that was not raised before the first appellate authority.

Analysis:

1. The issue of maintainability of cross-objections was raised by the Learned CIT(DB.) regarding objections not part of the first appellate order. The Learned AR opposed this, citing decisions overruling the objection and supporting the filing of cross-objections as an appeal within the specified time frame. The ITAT has held that cross-objections can be filed against any part of the appellate authority's order, even if not raised before the lower authorities, as per the provisions of section 253(4) of the Income-tax Act, 1961 and Rule 22 of the ITAT Rules, 1963.

2. The interpretation of the provisions under section 253(4) of the Income-tax Act, 1961 and Rule 22 of the ITAT Rules, 1963 was crucial in determining the scope of filing cross-objections. The ITAT emphasized that cross-objections are to be treated as appeals, with the only difference being the time frame for filing. The Hon'ble High Court's decision clarified that cross-objections need not be confined to points raised by the opposite party in the main appeal, allowing for a broader scope of legal issues to be raised.

3. The question of whether a cross-objector can raise an issue before the ITAT that was not raised before the first appellate authority was extensively discussed. The ITAT, citing various precedents including the Special Bench decision, held that as long as the issue is relevant to the correct determination of taxes and facts can be ascertained from existing records, new legal issues can be raised. The ITAT's discretion to allow new grounds, as established by the Hon'ble Supreme Court, ensures the correct assessment of tax liability based on legal considerations.

In conclusion, the ITAT ruled in favor of the assessee, allowing the legal issues raised in the cross-objections for the first time before the ITAT. The bona fide reasons for not raising these issues earlier were considered valid, and the objections were deemed maintainable. The parties were directed to proceed with their respective cases on their merits, emphasizing the importance of correctly assessing tax liability based on legal considerations.