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TMI Blog1985 (5) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... son that the assessee did not declare any dividend at all within the period of twelve months immediately following the expiry of the previous years ended on 31-12-1977 and 31-12-1978, respectively, and that, therefore, the assessee-company fell within the mischief of section 104. The ITO rejected the assessee's reasons for not declaring any dividends and levied the additional tax at the rate of 37 per cent in respect of both the years. 3. When the matter went before the Commissioner (Appeals), he upheld the action of the ITO and dismissed the assessee's appeals. However, it appears that, subsequently, on a rectification application moved by the assessee, the Commissioner (Appeals) directed the ITO to levy the additional tax at the rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dastur argued that the additional ground raised by the assessee involved an important legal issue, which affected the jurisdiction of the ITO to take action against the assessee-company under section 104 for these two years ; that though the assessee had not taken this ground either before the ITO or before the Commissioner (Appeals) or even in the original grounds of appeal filed before us, ground No. 1 in paragraph No. 1 of the grounds of appeal for both the years filed before the Tribunal, was wide enough to cover the point raised by the assessee in this additional ground of appeal and that the assessee has filed this additional ground of appeal in both the years to bring out the real controversy by way of an additional argument. Shri Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceedings or in the course of the proceedings under section 104. Shri Dastur fairly stated that this point was lost sight of by the assessee due to inadvertence, as it involves the application of the principles contained in section 2(18)(b)(B) to the facts of the present case, which involves a complicated process of legal reasoning. In this connection, he pointed out that the assessments for both the years had been completed against the assessee-company in the status of 'a company in which the public are not substantially interested' and that the same had become final. He submitted that since the issue raised by the assessee in the additional ground of appeal goes to the root of the matter affecting the jurisdiction of the ITO t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see to take up such a plea. In support of his submissions, Shri Vohra relied on the decision in WTO v. Shiva Prasad Bagaria [1982] 2 ITD 449 (Cal.), the Bombay High Court decision in the case of Ugar Sugar Works Ltd. v. CIT [1983] 141 ITR 326 and the decision of the Supreme Court in the case of Addl. CIT v. Gurjargravures (P.) Ltd. [1978] 111 ITR 1. 7. Shri Dastur, in his reply, submitted that the point involved in the additional ground of appeal was not a simple one, but a complicated legal issue, that it was only one aspect or facet of the assessee's contention against the order passed by the ITO under section 104, which was being challenged in the appeals before the Tribunal and that, as explained by him, this point was lost sight of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those of the AAC in section 251 with particular reference to the Explanation thereto, would make it distinctly clear that the jurisdiction of the AAC, while dealing with the assessee's appeal against the ITO's order before him, extends to all matters arising in the proceedings, though not raised before him by the assessee, while the Tribunal's jurisdiction in an appeal before it is restricted only to passing orders on the subject-matter of the appeal. However, within the four corners of that jurisdiction, the Tribunal has been clothed with almost the same powers as those of the AAC except that of enhancement." Again, their Lordships of the Bombay High Court discussed their earlier decisions in CWT v. N.A. Narielwalla [1980] 126 ITR 344 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the subject-matter of appeal through the original grounds of appeal. It was on these facts that the Tribunal upheld the assessee's objections to the admission of the additional grounds filed by the revenue. But in the present case, the objection raised in the additional ground of appeal pertains to the subject matter of appeal, namely, the legal validity and correctness of the orders passed by the ITO under section 104 for both the years. Therefore, this decision relied on by the revenue is inapplicable to the facts of the present case. 10. We, therefore, accept the contentions of the learned counsel for the assessee and admit the additional ground of appeal quoted above. 11. As stated already, this additional ground of appeal admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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