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TMI Blog1975 (12) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... sistant Commissioner ? " We are concerned in this case with the assessment year 1967-68. The assessee came before the Tribunal with a grievance that though at the time of the arguments before the Appellate Assistant Commissioner the assessee had orally contended that relief under section 80J of the Income-tax Act, 1961, should have been granted, the Appellate Assistant Commissioner had not considered this submission made on behalf of the assessee. At the time of the hearing before the Appellate Assistant Commissioner the assessee had orally prayed for relief under section 80J(3) and the Appellate Assistant Commissioner had orally agreed to admit the said further ground but actually when he came to pass the order, the Appellate Assistant Commissioner had not given any relief under section 80J(3). When we turn to the grounds of appeal before the Tribunal, we find that the grounds of appeal are in substance only two : (1) The Appellate Assistant Commissioner had erred in not considering and deciding the appellant's oral contention that it should have been allowed relief due to it under section 80J ; (2) the appellant had no taxable income in the year under assessment and hence it co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities have been discussed in a series of decisions and we find that there are two decisions of the Supreme Court which deal directly with this point. In Hukumchand Mills Ltd. v. Commissioner of Income-tax [1967] 63 ITR 232 (SC), the question has been considered. The Supreme Court in that case was concerned with the provisions of section 33(4) of the Indian Income-tax Act, 1922. Ramaswami J., delivering the judgment of the Supreme Court, has observed at page 236 : " The powers of the Tribunal in dealing with appeals are expressed in section 33(4) of the Act in the widest possible terms. Section 33(3) of the Act states that 'an appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner...' Section 33(4) reads as follows : '33. (4) The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner.' The word 'thereon', of course, restricts the jurisdiction of the Tribunal to the subject-matter of the appeal. The words 'pass such orders as the Tribunal thinks fit' includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s fit and hence the Tribunal has all the powers except possibly the power of enhancement which are conferred upon the Appellate Assistant Commissioner under section 31 of the Act. All these powers can be exercised by the Tribunal only within the four corners of the jurisdiction which is restricted to the subject-matter of the appeal. While dealing with the subject-matter of the appeal in the exercise of the wide amplitude of its powers, the Tribunal may allow the party to take up a new ground of appeal provided ample opportunity is given to the other side to meet this new ground of appeal. But even the new ground of appeal must relate to the same subject-matter of appeal because the jurisdiction of the Tribunal is restricted to the subject-matter of the appeal. It must also be pointed out that so long as the subject-matter of the appeal remains the same and the relief which is sought before the Tribunal is on the same ground as before, a new section of the Act can be relied upon which was not relied upon before either the Income-tax Officer or the Appellate Assistant Commissioner. But that is a new ground of appeal which is a distinct thing from the subject-matter of the appeal or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination of questions raised before the departmental authorities. All questions whether of law or of fact which relate to the assessment of the assessee may be raised before the Tribunal : If for reasons recorded by the departmental authorities in rejecting a contention raised by the assessee, grant of relief to him on another ground is justified, it would be open to the departmental authorities and the Tribunal, and indeed they would be under a duty, to grant that relief. The right of the assessee to relief is not restricted to the plea raised by him...... The subject-matter of the appeal in the present case was the right of the assessee to claim allowance for Rs. 93,215. Whether the allowance was admissible under one head or the other of sub-section (2) of section 10, the subject-matter for the appeal remained the same, and the Tribunal having held that the expenditure incurred fell within the terms of section 10(2)(v), though not under section 10(2)(vib), it had jurisdiction to admit that expenditure as a permissible allowance in the computation of the taxable income of the assessee." If the first part of the passage which we have quoted above is read divorced from the seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that relief. " So, Mahalakshmi Textile Mills Ltd.'s case [1967] 66 ITR 710 (SC) cannot be read as holding that the Tribunal has unlimited jurisdiction to cover all possible points that may be urged before it. The power to deal with all questions of law or fact must be exercised within the four corners of the jurisdiction which is restricted to the subject-matter of the appeal. It is in the light of this clear distinction between the subject-matter of the appeal, the powers which the Tribunal can exercise while exercising that jurisdiction and the grounds of appeal, that we must now read the different authorities of the different High Courts. In Commissioner of Income-tax v. Karamchand Premchand P. Ltd. [1969] 74 ITR 254 (Guj), the facts were rather peculiar and it was in the light of the facts of that case that the question relating to the scope and ambit of the jurisdiction of the Tribunal were considered by this High Court. At the stage of the proceedings before the Income-tax Officer in that particular case, the assessee made, inter alia, three claims for deduction : one was for depreciation in respect of the land on which stood the building of the assessee ; the other was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the subject-matter of the third claim must be held to be expenditure incurred wholly and exclusively for the purpose of the assessee's business and as such allowable as a deduction under section 10(2)(xv) of the Indian Income-tax Act, 1922, corresponding to section 37 of the Income-tax Act, 1961. The assessee there upon made an application to the Tribunal for raising an additional ground of appeal challenging the disallowance of the third claim and this application was filed before the actual date of hearing of the appeal. When the appeal reached hearing, the first claim was not pressed by the assessee since it was already covered by a decision given in the meantime by the Supreme Court in Commissioner of Income-tax v. Alps Theatre [1967] 65 ITR 377 (SC). The main and the only controversy between the ; parties, therefore, at the stage of the appeal before the Tribunal, centered round the third claim sought to be agitated by means of the additional ground and the question before the High Court was ultimately, whether the Tribunal had jurisdiction to allow this contention about the third claim to be raised, and the question which was referred to the High Court in Karamchand Premch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner may consider and decide any matter arising out of proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Appellate Assistant Commissioner by the assessee. The Explanation was not there in the old Act but even without the Explanation, the interpretation consistently placed by the High Courts on the corresponding provisions of the old Act was--vide Narrondas Manordass v. Commissioner of Income-tax [1957] 31 ITR 909, 918 (Bom) and this interpretation was confirmed by the Supreme Court in Commissioner of Income-tax v. McMillan and Co. [1958] 33 ITR 182 (SC) and Commissioner of Income-tax v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC) that once an appeal is preferred by an assessee, the powers of the Appellate Assistant Commissioner are not confined to a consideration of only those matters which are raised by the assessee in appeal but he may also consider and decide matters not raised in appeal but 'considered by the Income-tax Officer and determined in the course of the assessment'. The Explanation gives statutory recognition to this interpretation and accords legislative approval to it. The result is that if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unlike section 246, this section confers a right of appeal both on the assessee and the revenue-vide sub-sections (1) and (2)--and as appears clearly from the language of sub-section (4) and particularly the words " the Income-tax Officer or the assessee may, notwithstanding that he may not have appealed against such order or any part thereof...file a memorandum of cross-objections...against any part of the order..." It postulates that in respect of the same order of the Appellate Assistant Commissioner, there may be an appeal by the assessee as to one part and an appeal by the revenue as to the other. The reason for this departure in the scheme is obvious. The order of the Appellate Assistant Commissioner, as pointed out above, would consist of various decisions on matters considered by him and out of these decisions, some may be against the assessee and some may be against the revenue. The assessee, if he does not accept the decisions which are against him, may prefer an appeal to the Tribunal against that part of the order of the Appellate Assistant Commissioner which comprises such decisions (vide sub-section (1)) and the revenue also, similarly, may, if it does not accept the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner has not decided a point even though he was invited to do so, it can be said that by failing to decide it, impliedly he has given his decision and even that implied decision can be made the subject-matter of the appeal before the Tribunal but only the express decision of the Appellate Assistant Commissioner or the implied decision of the Appellate Assistant Commissioner can be made the subject-matter of the appeal before the Tribunal. If there is no such decision on any part of the assessment, namely, the express decision or implied decision, there cannot be any appeal to the Tribunal and this has been clearly emphasised by Bhagwati C.J. in the passage that we have set out above. This High Court in Karamchand Premchand P. Ltd.'s case [1969] 74 ITR 254 (Guj) held ultimately that the Tribunal was not entitled to allow the assessee to agitate the question under the guise of granting leave under rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963. If the matter had been the subject-matter of the appeal, it would have been open to the Tribunal to allow the assessee to raise a new ground of appeal but it must be with reference to the same subject-matter of the appeal an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand Premchand P. Ltd.'s case [1969] 74 ITR 254 (Guj) merely illustrates and exemplifies what can happen if the question sought to be agitated before the Tribunal does not pertain to the subject-matter of the appeal before the Tribunal. In Commissioner of Income-tax v. Gurjargravures P. Ltd. [1972] 84 ITR 723 (Guj), the question before this High Court was regarding the powers of the Appellate Assistant Commissioner and it was emphasized that where an assessee prefers an appeal against an order of assessment, the whole assessment order is thrown open before the Appellate Assistant Commissioner and he can interfere with any part of the assessment whether in favour of the assessee or against him. It was emphasized that the jurisdiction of the Appellate Assistant Commissioner is not confined to the subject-matter of the appeal but extends to the subject-matter of the assessment. It is true that, in that particular case the question involved was regarding the relief to be granted under section 84 of the Act of 1922 now replaced by section 80J of the Act and when the assessee claimed exemption of a portion of the profits brought to tax by the Income-tax Officer for the first time in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject-matter of the appeal but once it is shown that a particular claim or contention was the subject-matter of the appeal before the Tribunal, the law authorises the Tribunal to pass such orders in relation to such claim or contention as it thinks fit." This precisely brings out the distinction between jurisdiction on the one hand and the powers of the Tribunal in the exercise of the jurisdiction on the other. In view of what we have discussed above, it cannot be said that what has been held by this High Court in Karamchand Premchand P. Ltd.'s case [1969] 74 ITR 254 (Guj) is in any way in conflict with the decisions of the Supreme Court in Hukumchand Mills Ltd.'s case [1967] 63 ITR 232 (SC) and Mahalakshmi Textile Mills Ltd.'s case [1967] 66 ITR 710 (SC). This High Court has merely applied one aspect of the principle when it found that the particular claim or contention which was sought to be raised before the Tribunal did not form part of the subject-matter of the appeal before the Tribunal. By analysing the different sections pertaining to the appeal, the High Court has merely pointed out what can possibly be the subject-matter of the appeal before the Tribunal. Our att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the facts as found could be raised before the Tribunal and it was within the jurisdiction of the appellate powers of the Tribunal to permit the party to raise the question which it sought to raise for the first time before the Tribunal. Therefore, this case merely illustrates that the subject-matter of the appeal remaining undisturbed, it is open to a party to support its contention by a new legal argument altogether though such a legal argument was not urged either before the Income-tax Officer or before the Appellate Assistant Commissioner. In Beharilal Ramcharan Cotton Mills Ltd. v. Commissioner of Income-tax [1966] 62 ITR 212 (Bom), the claim for depreciation before the Income-tax Officer and the Appellate Assistant Commissioner was based on clause (via) of sub-section (2) of section 10 but in the grounds of appeal to the Appellate Tribunal, it was sought to be based on an alternative claim that on the materials on record, the assessee was entitled to depreciation under section 12(3) and it was held that no new case was being set up but only some provision of law was sought to be called in aid to support the claim for depreciation on the same set of facts and it was held b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding out what the Appellate Assistant Commissioner expressly or impliedly decided. We must emphasize again that by implied decision, we mean that though a point might have been raised before the Appellate Assistant Commissioner, in his final order the Appellate Assistant Commissioner might not have dealt with that point and thereby impliedly rejected it. That is an implied decision of the Appellate Assistant Commissioner and a party may be aggrieved by an express decision of the Appellate Assistant Commissioner or by an implied decision of the Appellate Assistant Commissioner. The subject-matter of the appeal before the Tribunal can only be the decision express or implied of the Appellate Assistant Commissioner and the jurisdiction of the Tribunal is restricted to the subject-matter of the appeal. Once the subject-matter of the appeal is determined, the Tribunal has very wide powers to deal with all questions of fact and law pertaining to that subject-matter of appeal and it can allow a new question of law to be raised in support of the same claim for relief. On the facts found, if a new aspect of law can be applied, it can allow it to be urged even though that aspect of the law wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Appellate Assistant Commissioner by the assessee. In our opinion, therefore, the Tribunal should first ascertain for itself whether such a contention had in fact been urged before the Appellate Assistant Commissioner. If it comes to the conclusion that it was not urged by the assessee before the Appellate Assistant Commissioner, then the grievance that the Appellate Assistant Commissioner did not take that contention regarding section 80J into account cannot form the subject-matter of the appeal before the Tribunal and it is not open to the Tribunal to allow the assessee to raise the same plea before the Tribunal for the first time. In view of the facts of this case, two courses are open to us : one is to call for a supplementary statement of the case from the Tribunal and the other is to leave the Tribunal to take appropriate steps to adjust its decision under section 260(1) in the light of the answer of this court. If we direct the Tribunal to submit a supplementary statement of the case, the Tribunal will, according to the decisions of the Supreme Court in New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax [1959] 37 ITR 11 (SC), Petlad Turkey Red Dye Works C ..... 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