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TMI Blog1985 (11) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh, and 4. Shri Deepak Kumar. Till August 31, 1968, the assessee was carrying on a business in exhibition of films in Minerva Talkies, Jaipur, on its own account but from September 1, 1968, the Minerva Talkies was leased out to M/s. Jiwanmal Surajmal on a monthly rent of Rs. 8,000 (Rs. 4,000 for building and Rs. 4,000 for machinery and furniture, etc.). In the return for the assessment year 1969-70, the assessee did not disclose the income from the lease rent of the cinema building on the plea that it was assessable in the hands of the members of the association of persons. The Income-tax Officer therefore, included a sum Rs. 4,305 in the assessment year 1969-70 and Rs. 20,825 in 1970-71 under the head " Income from property ". The assessee went in appeal before the Appellate Assistant Commissioner and contended before him that the Income-tax Officer had taken income from rent of the above property under the head " Income from house property " and as the shares of the co-owners were determinate, the income had to be taxed proportionately in the hands of the co-owners and not in the hands of the " association of persons ", vide section 26 of the Income-tax Act, 1961. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the order of the Tribunal, has been referred to us for our opinion. The question referred to us raises an important question as to the power or jurisdiction of the Tribunal in entertaining the plea, which has not been taken earlier before the authorities below and which may have been taken for the first time before the Tribunal. A perusal of the order of the Appellate Assistant Commissioner shows that the contention raised by Shri S. Gupta, representative of the assessee, has been recorded and, thereafter, the learned Appellate Assistant Commissioner immediately expressed his opinion that the contention appears to be correct. What was the contention of the Department, it appears, has not been stated and perhaps it is on this basis, it has so gone into the order of the Tribunal that at no stage in the past, the Department has taken the stand that the income from the lease rent of the cinema building was assessable under the head " Other sources " under section 56(2)(iii) of the Income-tax Act, 1961. The plea was thus found not entertainable at the stage before the Appellate Tribunal and it was also not found entertainable as it may result in the enhancement of the total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be allowed to be taken for which there is specific rule II of the Income-tax (Appellate Tribunal) Rules, 1963. Rule 11 reads as under : " Grounds which may be taken in, appeal.-The appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule: Provided that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground." A perusal of the above rule shows that the Tribunal is competent to decide the appeal on grounds which are not set forth in the memorandum of appeal, or taken by leave of the Tribunal and if the Tribunal takes such grounds in consideration, the only obligation of the Tribunal is to give to the party affected by such ground, a sufficient opportunity of being heard on that ground. Rule 11 thus only places this restriction on the powers of the Tribunal that it cannot rest its decision on any other ground, which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then was, agreed. Falshaw C.J. stated that "there is no doubt from the decision of the Supreme Court in Textile Supply Co. v. CIT [1959] 36 ITR 242, that the ground on which the Appellate Tribunal set aside the registration was a good ground, but we are not concerned with that matter in the present case, the only question being whether the decision could be based on a point not previously raised at any stage or even in the grounds of appeal " and reference was made to rule 12 of the Income-tax (Appellate Tribunal) Rules. Reliance was placed on New India Life Assurance Co. Ltd. v. CIT/EPT [1957] 31 ITR 844 (Bom). In that case, the Appellate Tribunal had based its decision on a ground not raised in the memorandum of appeal and it was held by Chagla C.J. and Tendolkar J. that the Appellate Tribunal had power to give leave to the appellant to raise the question of apportionment and must be presumed to have given such leave in the circumstances of the case and it was competent to the Tribunal to reverse the decision of the Appellate Assistant Commissioner on the ground that the question of liability to tax should be determined after the question of apportionment had been decided. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal. " In D. M. Neterwalla v. CIT [1980] 122 ITR 880 (Bom), the learned judges held that the Tribunal can allow the Department to raise a new contention before it for the first time. The new contention was that the assessment of the amount would be justified in view of the provisions of section 2(6C)(iii) of the Act. Similar is the view taken in CIT v. Gilbert Barker Manufacturing Co. [1978] 111 ITR 529 (Bom). It was held by Tulzapurkar J., as he then was, speaking for the Bench, as under (vide headnote at p. 529): " The Appellate Tribunal has the discretion to allow any party to an appeal, may be the appellant or the respondent, to raise a new point or new contention provided two conditions are satisfied:-(1) No new facts are required to be brought on record for disposing of such new point, and (2) An opportunity is given to the other side to meet the point. " Thus, there is a plethora of decisions on the point that a new plea can be taken or can be allowed to be raised for the first time in appeal before the Appellate Tribunal. In the light of the above discussion, our answer to the question is that the Tribunal was not justified in refusing to entertain the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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