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TMI Blog2025 (3) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... eyes of law.
Thus, order passed u/s. 143(3) r.w.s. 147 in absence of a notice u/s. 143(2) of the Act having been issued by him cannot be sustained and is liable to be quashed. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and circumstances of the case and in law, Id CIT(A) has erred in sustaining addition of Rs. 91,57,837 on the count of 'long term capital gain' on land acquired by NRDA, which is unjustified and is liable to be deleted." As the assessee by raising the aforesaid additional ground of appeal has sought adjudication on issues which involves purely a question of law and would not require looking any further beyond the facts available on record, therefore, we have no hesitation in admitting the same. Our aforesaid view that where an assessee, had raised, though for the first time, an additional ground of appeal before the Tribunal which involves purely a question of law and requires no further verification of facts, then, the same merits admission finds support from the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC). 2. Shri Sunil Kumar Agrawal, Ld. Authorized Representative (for short 'AR') for the assessee at the threshold submitted that the present appeal involves a delay of 15 days. Elaborating on the reasons leading to the impugned delay, the Ld. AR has filed an application a/w. an "affidavit" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) observed that the A.O while framing the assessment had rightly acted upon the reply/reports of the Tehsildar and Patwari, as per which, the subject land that was acquired by NRDA was not an agricultural land. It was further observed by him that the land in question was not utilized by the assessee for agricultural purposes during the last three preceding years. Apart from that, the CIT(Appeals) observed that the assessee had not disclosed any agricultural income in his return of income for the year under consideration, i.e. A.Y.2012-13 as well as in the immediately preceding and succeeding years. It was further noticed by him that the Patwari's report revealed that the subject land was barren for more than 5 years which was reflected in Form P-II (Panchsala Khasra) for the year under consideration that was filed by the assessee in the course of assessment proceedings. The CIT(Appeals) observed that the assessee in the course of the assessment proceedings had based on a letter of the Executive Engineer, PWD, Raipur claimed that the distance of the subject land situated at Teli Talab (Tuta Mod) from Raipur (Panchpedi Naka) was 12.8 km, and, thus, being situated beyond 08 kms wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and under consideration is not an agricultural land as per the information given by the Tehsildar and Village Patwari. It is also to note that the land was not used for agricultural purposes by the appellant for two years immediately preceding the date of transfer to claim exemption u/s.10(37) of the Act. Thus, the transaction made by the appellant with NRDA does not fall under clause (ii) of Section 10(37) of the Act. The reliance placed by the Assessing Officer on the decision of Hon'ble Supreme Court in the case of Smt. Sarifa Bibi Mohmed Ibrahim Vs. CIT report in 2014 ITR 631(SC) squarely applies to the facts of the case. Considering the facts and circumstances of the case, the computation of LTCG of Rs. 91,57,837/- is upheld and revised Ground No.4 is dismissed. 6. In the result, the appeal is dismissed." 7. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 8. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. AR to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had produced the assessment record and filed the copy of a letter addressed to her office by the DCIT-1(1), Raipur, i.e. the A.O qua the issue under consideration. We find on a perusal of the letter dated 03.06.2024 of the A.O, that he had objected to the challenge thrown by the assessee as regards the validity of the jurisdiction that was assumed by the A.O to frame the assessment u/s.143(3) r.w.s. 147 of the Act, 27.12.2018 de-hors a notice u/s. 143(2) of the Act, for the reason that now when the said objection was never raised before the lower authorities, therefore, the same could not be raised in the course of the present proceedings before the Tribunal. But strangely, we find that the A.O had failed to answer the query that was specifically raised by the bench, i.e. as to whether or not a notice u/s.143(2) of the Act was ever issued by the A.O in the course of the assessment proceedings. Apart from that, the A.O had stated that no obligation is cast to issue notice u/s. 143(2) of the Act for framing of an assessment u/s. 147 of the Act. 13. As the A.O had come forth with an evasive reply on the issue as to whether or not a notice u/s. 143(2) of the Act was issued in the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng assessment proceedings and rather, without any objection, having voluntarily taken part in such proceedings, could not seek annulment of assessment proceedings on ground of non-service of notice." Further it also held in Josh Builders & Developers (P.) Ltd Vs PCIT - [2017] 79 taxmann.com 435 (Punjab & Haryana)/[2016] 389 ITR 314 (Punjab & Haryana) that "limitation prescribed under proviso to section 143(2) is not applicable to reassessment under section 147" On a perusal of the aforesaid report dated, 03.06.2024 of the A.O, we find that he had not challenged the assessee's claim that no notice u/s. 143(2) of the Act was issued to him in the course of the assessment proceedings. Rather, it is the AO's contention that as the assessee had not objected to the issuance and service of a valid notice u/s. 143(2) of the Act during the course of assessment proceedings and had participated in the same, therefore, he cannot be permitted to raise such objection in the course of the present appellate proceedings. The A.O in support of his aforesaid contention had relied on the judgment of the Hon'ble High Court of Punjab & Haryana in the case of CIT Vs. OCM India Ltd. (2017) 79 taxmann.com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imited v. Commissioner of Income Tax, 1991 Supp (2) SCC 744 = (1991) 187 ITR 688. The second submission is based on a judgment of the Supreme Court in Goetze (India) Limited v. Commissioner of Income Tax. 11(A). In Jute Corporation of India Limited v. CIT, for the assessment year 1974-75 the appellant did not claim any deduction of its liability towards purchase tax under the provisions of the Bengal Raw Jute Taxation Act, 1941, as it entertained a belief that it was not liable to pay purchase tax under that Act. Subsequently, the appellant was assessed to purchase tax and the order of assessment was received by it on 23rd November, 1973. The appellant challenged the same and obtained a stay order. The appellant also filed an appeal from the assessment order under the Income Tax Act. It was only during the hearing of the appeal that the assessee claimed an additional deduction in respect of its liability to purchase tax. The Appellate Assistant Commissioner (AAC) permitted it to raise the claim and allowed the deduction. The Tribunal held that the AAC had no jurisdiction to entertain the additional ground or to grant relief on a ground which had not been raised before the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." [emphasis supplied] (B) It is clear, therefore, that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. They have the jurisdiction to entertain the new claim. That they may choose not to exercise their jurisdiction in a given case is another matter. The exercise of discretion is entirely different from the existence of jurisdiction. 12. At page 694, after referring to certain observations of the Supreme Court in Additional Commissioner of Income-tax v. Gurjargravures P. Ltd., (1978) 111 ITR 1, the Supreme Court observed at Page 694 as under :- "The above observations do not rule out a case for raising an additional ground before the Appellate Assistant Commissioner if the ground so raised could not h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led or when the assessment order was made fall within the second category viz. where "the ground became available on account of change of circumstances or law." 14. The facts in Jute Corporation of India Ltd., various judgments referred to therein as well as in subsequent cases, which we will refer to, establishes this beyond doubt. In many of the cases, the grounds were, in fact, available when the return was filed and/or the assessment order was made. In Jute Corporation of India Ltd., the ground was available when the return was filed. The assessee did not claim any deduction of its liability to pay purchase tax as "it entertained a belief that it was not liable to pay purchase tax under the Bengal Raw Jute Taxation Act, 1941". Thus, the ground existed when the return was filed. The assessment order was even made and received by the assessee. It is only after the appeal was filed that the assessee claimed a deduction in respect of the amount paid towards the purchase tax under the said Act. It is also significant to note that the assessee's entitlement to claim deduction had been held to be valid in view of an earlier judgment of the Supreme Court in Kedarnath Jute Manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was a conflict of decisions, placed the papers before the Hon'ble Chief Justice for constituting a larger bench to resolve the controversy. The Full Bench answered the reference in the affirmative and in favour of the assessee. The Full Bench held as under: "Thus, the Appellate Assistant Commissioner has very wide powers while considering an appeal which may be filed by the assessee. He may confirm, reduce, enhance or annul the assessment or remand the case to the Assessing Officer. This is because, unlike an ordinary appeal, the basic purpose of a tax appeal is to ascertain the correct tax liability of an assessee in accordance with law. Hence an Appellate Assistant Commissioner also has the power to enhance the tax liability of the assessee although the Department does not have a right of appeal before the Appellate Assistant Commissioner. The Explanation to subsection (2), however, makes it clear that for the purpose of enhancement, the Appellate Assistant Commissioner cannot travel beyond the proceedings which were originally before the Income-tax Officer or refer to new sources of income which were not before the Income-tax Officer at all. For this purpose, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax (Appeals) had erred and failed in their duty in adjudicating the matter correctly and by mechanically including the amount in the total income. It is pertinent to note that the assessee contended that it was entitled to the deduction in view of two orders of the Special Benches of the Tribunal and the assessee further stated that it had raised these additional grounds on learning about the legal position subsequently. The Tribunal declined to entertain these additional grounds. The Supreme Court did not answer the question on merits, but framed the following question and held as under :- "4. The Tribunal has framed as many as five questions while making a reference to us. Since the Tribunal has not examined the additional grounds raised by the assessee on merit, we do not propose to answer the questions relating to the merit of those contentions. We reframe the question which arises for our consideration in order to bring out the point which requires determination more clearly. It is as follows: "Where on the facts found by the authorities below a question of law arises (though not raised before the authorities) which bears on the tax liability of the assessee, whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have been expressly referred to in detail by the CIT(A) and by the Tribunal. 20. We wish to clarify that both the appellate authorities have themselves considered the additional claim and allowed it. They have not remanded the matter to the Assessing Officer to consider the same. Both the orders expressly direct the Assessing Officer to allow the deduction of Rs. 40,00,000/- under section 43B of the Act. The Assessing Officer is, therefore, now only to compute the respondent's tax liability which he must do in accordance with the orders allowing the respondent a deduction of Rs. 40,00,000/- under section 43B of the Act. 21. The conclusion that the error in not claiming the deduction in the return of income was inadvertent cannot be faulted for more than one reason. It is a finding of fact which cannot be termed perverse. There is nothing on record that militates against the finding. The appellant has not suggested, much less established that the omission was deliberate, mala-fide or even otherwise. The inference that the omission was inadvertent is, therefore, irresistible. 22. It was then submitted by Mr. Gupta that the Supreme Court had taken a different view in Goetz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case was limited to the power of the assessing authority and that the judgment does not impinge on the power of the Tribunal under section 254. 24. A Division Bench of the Delhi High Court dealt with a similar submission in Commissioner of Income-tax v. Jai Parabolic Springs Limited, (2008) 306 ITR 42. The Division Bench, in paragraph 17 of the judgment held that the Supreme Court dismissed the appeal making it clear that the decision was limited to the power of the assessing authority to entertain a claim for deduction otherwise than by a revised return and did not impinge on the powers of the Tribunal. In paragraph 19, the Division Bench held that there was no prohibition on the powers of the Tribunal to entertain an additional ground which, according to the Tribunal, arises in the matter and for the just decision of the case." We, thus, in terms of the aforesaid settled position of law are of a firm conviction that the assessee in the present case before us remained well within his right to assail the validity of the jurisdiction that was assumed by the A.O for framing of assessment u/s. 143(3) r.w.s. 147 of the Act, dated 27.12.2017 in absence of notice u/s. 143(2) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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