2024 (9) TMI 295 - HC - Income Tax

Validity of order passed u/s 153C r.w.s. 143(3) - whether question of law can directly be raised before this Court without being averred or pleaded before the ITAT ? - HELD THAT - As relying on K. Lubna Ors. Versus Beevi Ors. 2020 (1) TMI 1209 - SUPREME COURT it is settled that the parties cannot be restrained to raise a question of law even at the last stage of adjudication. In the present case, the Revenue has raised substantial questions of law which were not decided by the ITAT because there was no averment or arguments to that effect before the ITAT. Therefore, this Court is of the view that the present appeal deserves to be remanded back to the ITAT for fresh adjudication. the Appeal is remanded back to the ITAT with direction to decide the appeal afresh after giving opportunity of hearing to the parties and pass a speaking and well reasoned order on merits within a period of two months.

Issues:
1. Appeal against the order of ITAT dismissing the appeal filed by the Revenue.
2. Substantial questions of law proposed by the appellant.
3. Whether questions of law can be raised directly before the High Court without being raised before ITAT?

Analysis:
1. The High Court heard an Income Tax Appeal filed by the Revenue against the order passed by ITAT, Indore, which dismissed the appeal filed by the Revenue. The appeal stemmed from an assessment order passed under Section 153C read with Section 143(3) of the Income Tax Act, 1961. The Tribunal dismissed the appeal stating that challenging the quashing of the assessment order for a particular year would have been the appropriate course of action for the Revenue, rather than challenging the deletion or addition made by the CIT(A). The High Court found merit in the appeal and remanded the case back to the ITAT for fresh adjudication, emphasizing the need for a well-reasoned order on merits within a specified timeframe.

2. The appellant proposed substantial questions of law, challenging the ITAT's decision not to decide the appeal on merits due to the non-specific challenge by the Revenue regarding the validity of the assessment order quashed by CIT(A). The appellant argued that the ITAT should have considered the additions emerging from the assessment order on merits based on the grounds raised by the Revenue. The High Court acknowledged the importance of addressing these substantial questions of law and directed the ITAT to re-examine the appeal with a focus on substantial justice and legal grounds raised by the parties.

3. The High Court delved into the issue of whether questions of law can be raised directly before the High Court without being raised before the ITAT. Citing legal precedents, the Court established that parties cannot be restricted from raising questions of law even at the final stage of adjudication. In this case, the Revenue raised substantial questions of law that were not addressed by the ITAT due to the lack of averment or arguments before them. Consequently, the High Court remanded the appeal back to the ITAT for fresh adjudication, underscoring the importance of a comprehensive and reasoned decision based on the legal issues raised by the parties.

In conclusion, the High Court's judgment focused on the need for a thorough examination of substantial questions of law, the proper course of action in challenging assessment orders, and the procedural aspects of raising legal issues before the appellate authorities. The remand of the case back to the ITAT for a fresh adjudication underscores the significance of addressing legal grounds and ensuring a well-reasoned decision based on merits and applicable legal principles.

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