CPT V24P7-Art1 (Content).pmd - Taxmann

Direct Tax Laws
If the powers of Ld. CIT(A) can extend to
enhancement of income by identifying new sources
of income or incorrect deductions or allowances,
then it would be equally applicable to justified
claims of deductions and exemptions if available
to the assessee in accordance with law. Therefore,
there is not only an existence of jurisdiction in
CIT(A) for entertaining new claim, but also a
clear discretion vested in him to admit the
claim, get it verified, give opportunity to the
A.O. and decide it according to law.
Even though in an earlier decision of the Apex
Court in Addl. CIT v. Gurjargravures (P.) Ltd.
[1978] 111 ITR 1 it was held that a claim not
made before the A.O. could not be made even
before the first appellate authority but there
was a rider in that decision. It was observed
that if there was no material on record in support
of the claim, the claim could not be made for
the first time before the appellate authority.
This decision was apparently per incurium as
attention of the Court was not drawn to the
principles laid down by the Apex Court in CIT
v. Kanpur Coal Syndicate [1964] 53 ITR 225 wherein
it was held that the powers of AAC are plenary
in disposing of an appeal and scope of his
power is co-terminus with that of the ITO and,
therefore, he can do what the Income-tax officer
can do and can also direct him to do what he
has failed to do. When this principle is applied,
the AAC/CIT(A) can entertain new claims
investigate them and decide whether they should
be allowed or not? Therefore, the judgment of
the Apex Court in Gurjargravures (P.) Ltd. (supra)
was distinguished by several High Courts in
subsequent decisions. After distinguishing the
judgment in Gurjargravures (P.) Ltd. case (supra),
the Hon’ble Punjab and Haryana High Court
in Atlas Cycle Industries Ltd. v. CIT [1981] 5
Taxman 310 went to observe that “the powers
of the Tribunal in appeal to allow additional
plea and, consequently, for additional evidence
being taken, has been given to do substantial
justice between the parties. The Tribunal has
to allow or disallow the additional plea and
additional evidence after applying its judicial
mind”.
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There was a slight reversal of the view in CIT
v. Stepwell Industries Ltd. [1997] 94 Taxman
280 (SC) wherein Apex Court held that claim
not made before the first appellate authority
could not be allowed by Tribunal. But, the
subsequent decision in National Thermal Power
Corpn. Ltd. (NTPC) v. CIT [1998] 229 ITR 383
(SC), settled the law on the subject whereby
new grounds could be raised before the Tribunal
if no investigations into the facts were required.
It may also be noted that the judgment in
Stepwell Industries Ltd. (supra) was also apparently
per incurium as attention of the Hon’ble Apex
Court was not drawn to its own judgment in
Jute Corporation of India Ltd. (supra) wherein it
was held that view taken about power of the
first appellate authority in Gurjargravures (P.)
Ltd. case (supra) does not lay down a correct law.
However, as compared to CIT(A) there is a
slight difference in the powers conferred on
the ITAT. Whereas CIT(A) can entertain new
claim, investigate the correctness of the claim,
give opportunity to the A.O. and decide whether
claim has to be admitted or rejected, the Tribunal
on the other hand can entertain a new ground
only when all the facts relating thereto are on
the record. No investigation into the facts can
be directed by the Tribunal before or after
admitting new ground. The Tribunal is
empowered to pass such order on the appeal
as it thinks fit, which obviously does not include
an order enhancing the tax liability of the
assessee in the absence of an appeal by the
Department. The subject-matter of appeal before
the Tribunal cannot be anything different from
the subject-matter before the Appellate Assistant
Commissioner and necessarily it should be
something which arises out of the determination
made by the Appellate Assistant Commissioner.
This is because : (i) Statutory provisions do
not exist to enable Tribunal to enhance an
assessment, or to pick up a new source of
income not considered by the A.O./CIT(A),
(ii) Scope of powers of Tribunal is confined
to the grounds raised by the assessee or the
Department, (iii) These grounds must arise
from the order of CIT(A), (iv) Raising of new