2014 (12) TMI 60 - HC - Income Tax

Refusal to admission of additional ground Held that - In National Thermal Power Company Limited Versus Commissioner of Income-Tax 1996 (12) TMI 7 - SUPREME Court it has been held that u/s 254 of the Income Tax Act 1961 the Tribunal after giving an opportunity of being heard to both parties pass such orders as it thinks fit also in Jute Corporation of India Ltd. V/s. CIT 1990 (9) TMI 6 - SUPREME Court it has been held that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations if any prescribed by the statutory provisions - In the absence of any statutory provision the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter - There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the Assessee in seeking modification of the order of assessment passed by the Income Tax Officer there is no reason as to why the Tribunal could have disallowed the assessee from raising this ground the approach of the Tribunal is contrary to the express language of the statute the Tribunal s order cannot be sustained in law thus the order of the Tribunal is set aside and the matter is remitted back to the Tribunal Decided in favour of assessee.

Summary

Issues:
1. Admissibility of additional ground raised by the Assessee before the Tribunal.
2. Interpretation of the powers of the Tribunal under section 254 of the Income Tax Act, 1961.
3. Compliance with the binding judgment of the Hon'ble Supreme Court in the case of National Thermal Power Limited Company v. Commissioner of Income Tax.

Issue 1: Admissibility of Additional Ground:
The Assessee challenged the Tribunal's refusal to admit an additional ground related to a payment traceable to sections 194 and 194J of the Income Tax Act, 1961. The Tribunal based its decision on the ground that the issue did not arise from the order of the First Appellate Authority. The High Court, after hearing arguments from both parties, admitted the Appeal on the substantial question of law concerning the rejection of the additional grounds. The Court held that the Tribunal's refusal to allow the Assessee to raise the additional ground was unjustified, as the power of the Tribunal under section 254 is broad and not limited to issues arising from the First Appellate Authority's order.

Issue 2: Interpretation of Tribunal's Powers under Section 254:
The High Court referred to the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Limited Company v. Commissioner of Income Tax, emphasizing that the Tribunal's powers under section 254 of the Income Tax Act are extensive. The Court highlighted that the Tribunal has the discretion to consider questions of law arising in assessment proceedings even if not raised earlier. The Court rejected the narrow view that the Tribunal is confined only to issues from the Commissioner of Income Tax (Appeals) order, emphasizing that the Tribunal should be allowed to consider questions necessary for correctly assessing an Assessee's tax liability.

Issue 3: Compliance with Supreme Court Judgment:
The High Court reiterated the binding nature of the Hon'ble Supreme Court's judgment in the National Thermal Power case, stating that the Tribunal's disallowance of the Assessee from raising the additional ground was contrary to the express language of the statute and the Supreme Court's interpretation. The Court held that the Tribunal's order was unsustainable in law and quashed it, directing the Tribunal to re-hear the Appeal on merits and in accordance with the law. The Court emphasized that the Tribunal should admit the question raised by the Assessee and decide the Appeal after giving an opportunity to both sides, keeping all contentions open.

In conclusion, the High Court allowed the Assessee's Appeal, emphasizing the broad powers of the Tribunal under section 254 and the necessity to consider all relevant questions of law in assessment proceedings. The Court's decision was based on upholding the Assessee's right to raise additional grounds and ensuring a fair hearing before the Tribunal.