Patna High Court
Hindusthan Malleables And Forgings ... vs Commissioner Of Income-Tax on 11 December, 1990
Equivalent citations: 1991(39)BLJR699, [1991]191ITR110(PATNA)
JUDGMENT G.C. Bharuka, J.
1. As required by this court under Section 256(2) of the Income-tax Act, 1961, the Tribunal has refer rod the following questions of law to this court for its opinion :
"(i) Whether, in the facts and circumstances of the case, the Tribunal is justified in refusing to entertain the ground of appeal raised before it relating to Section 80J of the Income-tax Act, 1961, claim, merely on the ground that the same did not arise out of the order of the Appellate Assistant Commissioner, not having been raised in grounds of appeal before the Appellate Assistant Commissioner ?
(ii) Whether, in the facts and circumstances of the case, the assessee was entitled to the consideration of its claim under Section 80J of the Income-tax Act, 1961 ?
(iii) Whether, in the facts and circumstances of the case, the Tribunal was justified in passing an ex parte order ?"
2. The assessee is a limited company. It derives income from manufacture and sale of malleable castings, M. S. ingots, etc. This reference relates to the assessment year 1975-76. It is evident from the assessment order for this period that, while computing the income of the assessee, the Income-tax Officer had granted deductions in respect of depreciation and development rebate but there is not a whisper in the assessment order with regard to any claim or admissibility of any deduction under Section 80J of the Act. Since the Income-tax Officer had disallowed certain expenses and had also made certain additions in respect of the income as returned, the assessee preferred an appeal to the Appellate Assistant Commissioner. The assessee did not agitate the issue regarding admissibility of deduction under Section 80J either by way of taking any specific ground in this regard in the memorandum of appeal filed before the Appellate Assistant Commissioner or by raising it in any other form. Therefore, the Appellate Assistant Commissioner had no occasion to consider this aspect. Since the Appellate Assistant Commissioner granted only partial relief to the assessee even in respect of the relief sought for, a further appeal was taken to the Tribunal. In the memorandum of appeal filed before the Tribunal, apart from agitating other issues, a specific ground was taken claiming deduction under Section 80J of the Act. The Tribunal decided the appeal ex parte on merits after rejecting an application filed on behalf of the assessee for adjournment. It may be relevant to state here that, in view of the law laid down by the Supreme Court in the case of 677 v. S. Chenniappa Mudaliar [1969] 74 ITR 41, the Tribunal is not competent to dismiss an appeal for default and it is incumbent upon it to decide the grounds raised in the memorandum of appeal on merits.
3. In view of the law as laid down by the Supreme Court, the Tribunal considered each of the grounds taken by the assessee and decided them on merits but with regard to the ground pertaining to the claim under Section 80J of the Act, the Tribunal refused to entertain the same for the reasons that (i) from the records, it is clear that the assessee did not take this ground before the Appellate Assistant Commissioner and (ii) this ground does not arise out of the order of the Appellate Assistant Commissioner.
4. On these facts, the first question which precisely falls for consideration is whether the Tribunal has erred in refusing to entertain the ground pertaining to the claim under Section 80J merely because it was not raised before the Appellate Assistant Commissioner.
5. Learned counsel for the Revenue submitted that since no grievance was raised by the assessee before the Appellate Assistant Commissioner with regard to grant of deduction under Section 80J of the Act, as such, the Appellate Assistant Commissioner had no occasion to consider the admissibility of the said claim. Therefore, it cannot be said that the assessee was aggrieved by the order of the Appellate Assistant Commissioner on this issue. As such as, it was not open on the part of the assessee to agitate the said issue by taking a ground before the Tribunal for the first time and, accordingly, the Tribunal has rightly refused to entertain the said ground. On the contrary, learned counsel for the assessee has urged that even if the question of deduction under Section 80J was not agitated before the Appellate Assistant Commissioner since the entire assessment was open to challenge before the Tribunal and there are materials and evidence on record to support the claim, it was incumbent upon the Tribunal to entertain the grounds taken in this regard.
6. The question relating to the jurisdiction of the Tribunal to allow new grounds to be raised before it for the first time has many facets as has been considered by courts under varying circumstances, namely,
(i) when a particular issue relating to assessment was neither raised before the departmental authorities nor considered by them, and (a) relevant materials for adjudicating the issue are already on the record, or, (b) relevant materials are not on the record for adjudication of the issue and investigation into fresh facts was necessary ;
(ii) a particular claim was made on the basis of a certain plea before the departmental authorities but for the first time before the Tribunal, an alternative plea or reasoning was advanced in support of the said claim ;
(iii) an issue was raised before the departmental authorities but no ground in relation thereto was set forth in the memorandum of appeal and was sought to be raised by the appellant before the Tribunal subsequently.
7. There are a catena of cases decided by various High Courts answering the various facets of the problem indicated above. But, for the questions referred to this court, in my opinion, it is not necessary to examine the cases in detail. In my view, the ambit of the jurisdiction of the Tribunal with regard to entertainment of a new ground raised for the first time before it has been well-defined by the Supreme Court in the case of CIT v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710 in which it has been held that (at p. 713) "There is nothing in the Income-tax Act which restricts the Tribunal to the determination of questions raised before the departmental authorities. All questions, whether of law or of facts, which relate to the assessment of the assessee, may be raised before the Tribunal."
8. In view of the law laid down by the Supreme Court in Mahalakshmi Textile Mills Ltd.'s case [1967] 66 ITR 710, in my view, the Tribunal was not correct in refusing to entertain the ground of appeal raised before it relating to deduction under Section 80J of the Act merely on the ground that the same did not arise out of the order of the Appellate Assistant Commissioner as it was not even raised in the grounds of appeal before the Appellate Assistant Commissioner. No doubt, in Mahalakshmi Textile Mills' case [1967] 66 ITR 710, the Supreme Court was considering the ambit of the power of the Tribunal under Section 33(4) of the Indian Income-tax Act, 1922, but the same is pari materia with Section 254 of the present Act and, therefore, the dictum still holds good. This court has not been called upon to answer the question relating to the Tribunal's discretion to entertain a new ground for the first time for any other consideration and, as such, advisedly, I am refraining from entering into those aspects.
9. Since, in view of the above discussion, the Tribunal will be now required to consider the question of entertainment of the claim under Section 80J of the Act raised by the assessee which was taken as a ground in the memorandum of appeal, it is not necessary to examine and give any opinion in respect of questions Nos. (ii) and (iii).
10. Accordingly, my answer to question No. (i) is in the negative, i.e., in favour of the assessee and against the Department. Questions Nos. (ii) and (iii) need not be answered. There will be no order as to costs.
11. Let a copy of this judgment be sent to the Assistant Registrar of the Income-tax Tribunal, Patna Bench, for necessary action.
G.G. Sohani, C.J.
12. I agree.