2017 (9) TMI 1928 - HC - Income Tax

Validity of order passed under Section 142(2A) - ITAT has declined to permit the Petitioner to raise additional ground - HELD THAT - In the considered view of the Court the ITAT ought to have permitted the Petitioner to raise the aforementioned additional ground and ought to have decided the said additional ground on its merits in accordance with law. The writ petition is allowed and the impugned order passed by the ITAT is set aside. The petitioner is permitted to urge the additional ground no.22 before the ITAT which would decide the Petitioner s appeal including the above additional ground in accordance with law while passing the final order.

Summary

Issues involved:
Challenge to an interim order passed by the Income Tax Appellate Tribunal regarding the raising of an additional ground in an appeal for the Assessment Year 2008-2009.

Analysis:
1. The petitioner challenged an interim order passed by the Income Tax Appellate Tribunal (ITAT) that declined to permit the petitioner to raise an additional ground '22' in their appeal. The ITAT held that challenging the order under Section 142(2A) of the Income Tax Act, 1961, to show that the assessment was barred by limitation was impermissible based on the decision in Sahara India (Firm) v CIT. The ITAT interpreted the Supreme Court's decision as precluding such challenges before them.

2. However, the High Court noted that the ITAT had taken a different position in previous cases, as evidenced by orders enclosed with the petition. The Court cited an order where the ITAT acknowledged its jurisdiction to examine whether an assessment order was passed within the period of limitation prescribed under the Act. The Court highlighted that every facet of an assessment could be challenged in an appeal, including the legality of orders passed under Section 142(2A) or 142(2C) to demonstrate the assessment was beyond the limitation period.

3. The High Court further pointed out that the observation in Sahara India (Firm) v CIT was specific to the facts of that case and not intended as a general principle. The Court emphasized that the requirement of natural justice should be read into the provision of Section 142(2A) and clarified that the law on the subject should apply prospectively. The Court held that the ITAT should have allowed the petitioner to raise the additional ground and decide it on its merits in accordance with the law.

4. Consequently, the writ petition was allowed, setting aside the ITAT's impugned order. The petitioner was permitted to raise the additional ground '22' before the ITAT, which would decide the appeal, including the additional ground, in accordance with the law while passing the final order. The Court directed the issuance of copies of the order to the parties for compliance.