CPT V24P7-Art1 (Content).pmd - Taxmann

in the above judgment observed that the appellate
authority has all the powers which the original
authority has in deciding the question before
it subject to the restrictions and limitations
prescribed by statutory provisions. The powers
of the CIT(A) are co-terminus with the powers
of the A.O. while deciding any issue before
him. He can call for additional evidence, can
do the enquiries or direct the A.O. to carry
out requisite enquiries through remand.
Therefore, there cannot be any restrictions or
limitations on his powers to entertain new
claim or new ground. He has to be only satisfied
that the ground or claim raised before him
was bona fide and it could not be raised earlier
for good reasons.
The power of the first appellate authority is
derived from the statute wherein section 251
empowers him to confirm, reduce, enhance or
annul the assessment and to pass such orders
in the appeal as he thinks fit. The Explanation
to section 251 empowers him to “consider and
decide any matter arising out of the proceedings in
which the order appealed against was passed
notwithstanding that such matter was not raised
before him by the appellant.” A new claim of
deduction or exemption would affect the taxable
income and, accordingly, tax liability of the
assessee which is the core matter in the
proceedings before the A.O. and, therefore, even
if a matter is not raised before him CIT(A), he
can consider and decide any issue arising out
of the assessment proceedings. Even though
Hon’ble M.P. High Court in CIT v. Nirbheram
Deluram [1981] 5 Taxman 84 was of the view
that the proceedings before the A.O. are limited
to the matters expressly or impliedly raised by
the assessee and by the A.O. and so considered
by him, meaning thereby that new issues not
raised by the assessee or by the A.O. will not
be part of the proceedings before the A.O., but
this view was reversed by the Hon’ble Apex
Court in CIT v. Nirbheram Deluram [1997] 91
Taxman 181 by following the decision in Jute
Corporation of India Ltd. (supra) wherein the
Apex Court reiterated that the first appellate
authority has wide powers “co-terminus with
that of the Income-tax Officer”, so that, “he can
do what the Income-tax Officer can do and can
also direct him to do what he failed to do”.
Such vast powers are conceded to the first
appellate authority for the reason that the
Department has no right of appeal against the
assessment order and, in the course of scrutiny
of appeal filed by the assessee, the appellate
authority can see whether, in the interests of
the Revenue, the tax has to be enhanced? The
only limitation which seems to be placed on
the powers of the first appellate authority is
that he cannot travel beyond the record to find
out new source of income. If he is able to
identify new source of income from the record
of the A.O. or his own record of appeal, it
would be within his jurisdiction to consider
new source of income. After considering the
decisions in Nirbheram Deluram (supra); CIT v.
Kanpur Coal Syndicate [1964] 53 ITR 225 (SC);
CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR
891 (SC) and CIT v. Raj Bahadur Hardutroy Motilal
Chamaria [1967] 66 ITR 443 (SC) the Hon’ble
Delhi High Court in CIT v. Union Tyres [1999]
107 Taxman 447 laid down the principle that :
“The first appellate authority is invested
with very wide powers under section
251(1)(a) of the Act and once an assessment
order is brought before the authority, his
competence is not restricted to examining
only those aspects of the assessment about
which the assessee makes a grievance
and ranges over the whole assessment to
correct the Assessing Officer not only with
regard to a matter raised by the assessee
in appeal but also with regard to any
other matter which has been considered
by the Assessing Officer and determined
in the course of assessment. However,
there is a solitary but significant limitation
to the power of revision, viz., that it is
not open to the Appellate Assistant
Commissioner to introduce in the
assessment a new source of income and
the assessment has to be confined to those
items of income which were the subjectmatter
of original assessment”.
August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 55
675