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M/s. All Cargo Global Logistics Ltd.5th Floor, Diamond Square, C.S.T. Road, Kalina, Santacruz (E),Mumbai 400 098.
May, 22nd 2012
              IN THE INCOME TAX APPELLATE TRIBUNAL
                      SPECIAL BENCH : MUMBAI



        BEFORE HON'BLE PRESIDENT SHRI G.E. VEERABHADRAPPA,

                 SHRI D.K AGARWAL, JUDICIAL MEMBER          AND

                  SHRI K.G. BANSAL, ACCOUNTANT MEMBER



                  I.T.A Nos. 5018 to 5022 & 5059/M/10,

                    Asstt. Years 2004-05 to 2009-10



M/s. All Cargo Global Logistics       Vs.   DCIT,
Ltd.
                                            Central Csircle-44,
5th Floor, Diamond Square,
                                            Aayakar Bhavan,
C.S.T. Road, Kalina,
                                            M.K. Road,
Santacruz (E),
                                            Mumbai ­ 400 020.
Mumbai ­ 400 098.

(Appellant)                                 (Respondent)



      Appellant by: S/Shri S.E. Dastur, Sr. Advocate, B.V. Jhaveri, Advocate
      Respondent by: Shri Girish Dave, Standing Counsel

      Date of hearing             :    08-05-2012
      Date of pronouncement :           21-05-2012






                              INTERIM ORDER

PER BENCH:



      These appeals involve common grounds in respect of the claim of

the assessee u/s 80IA (4) of the Income Tax Act, 1961 ("the Act" for
                                     2
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


short). The issue was discussed before us with reference to the facts of

the case for assessment year 2004-05. The grounds taken by the

assessee in this appeal are as under :-



       1.   "On the facts and in the circumstances of the case and in law,
            the CIT(A) erred in not appreciating that the order passed by
            the Assessing Officer is without jurisdiction and bad in law as
            the jurisdiction u/s 153A is vitiated.
       2.   The Commissioner (Appeals) erred in confirming the
            disallowance of deduction of ` 1,25,77,637/- u/s 80IA(4) of the
            Act.
       3.   The CIT(A) erred in relying on the decision of the Appellate
            Triubnal in the case of Container Corporation of India Ltd. vs.
            ACIT [30 SOT 284 (Del.)], without appreciating that the facts in
            the present case are different from that of the aforesaid case.
       4.   The Commissioner (Appeals) failed to appreciate that the
            appellant is covered         by the definition of the term
            "infrastructure facility" given in Explanation to section
            80IA(4)(i) of the Act as "Ports".
       5.   The Commissioner (Appeals) erred in not following circular No.
            793 dated 23rd June, 2000 and clarification dated 16th
            December, 2005 issued by the CBDT which is binding on the
            Income Tax Authorities.
       6.   The Commissioner (Appeals) failed to appreciate that sub-
            clause (aa) of section 7 of the Customs Act, 1962 clarifies that
            the Customs Ports are the places which are identified and
            demarcated for the unloading of imported cargo and the
            loading of exported cargo and, therefore, the Container
            Freight Stations would be Customs Ports with reference to the
            Customs Law and, therefore, it would be qualified for the
            benefit of section 80-IA(4)(i) of the Act.
       7.   In the alternative and without prejudice, the Commissioner
            (Appeals) failed to appreciate that the Container Freight
            Station is an Inland Port and therefore, it is an infrastructure
            facility within the meaning of section 80-IA(4) of the Act.
       8.   The order of the Commissioner (Appeals) is bad in law and
            without jurisdiction."


1.1.   Appeals were heard by the Division Bench. It came to the conclusion

that two questions, mentioned in reference u/s 255 (3) dated 19.1.2011,
                                     3
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


should be considered by the special bench. The findings in this respect are

contained in paragraph nos. 4.1 and 5, which are reproduced below :-

      4.1   "Having heard both the sides and perused the relevant
            material on record, it is noticed that the assessment years
            under consideration are 2004-05 to 2009-10. The Delhi Bench
            of the Tribunal in Container Corporation of India Ltd. (supra)
            also considered assessment years 2003-04 to 2005-06. Some
            of the arguments raised by the Ld. Sr. A.R., in the proceedings
            before us, were also raised, considered and rejected by the
            Tribunal. At the same time, it is also true that there is no
            reference to certain relevant material in the Delhi Bench
            order, such as Notification S.O.744(E) dated 1.9.1998 (copy
            placed at page 118 of the paper book), letter of Director,
            CBDT, to all Chief Commissioners of Income-tax dated
            16.12.2005 (copy placed at page 120 of the paper book) etc.,
            which may have some bearing on the issue.

      5.    Under such circumstances, we propose the following two
            questions :

            1. "Whether, on the facts and in law, the scope of assessment
               u/s 153A encompasses additions, not based on any
               incriminating material found during the course of search"?

            2. "Whether, on the facts and in the circumstances of the
               case, the Ld. CIT (Appeals) was justified in upholding the
               disallowance of deduction u/s 80IA(4) of the Act, on
               merits"?"

1.2   Consequently, the Hon'ble President, Income Tax Appellate Tribunal,

constituted the special bench to decide following questions :-


      1.    "Whether, on the facts and in law, the scope of assessment
            u/s 153A encompasses additions, not based on any
            incriminating material found during the course of search?"

      2.    "Whether, on the facts and in the circumstances of the case,
            the learned CIT(Appeals) was justified in upholding the
            disallowance of deduction u/s 80IA (4) of the Act, on merits?"


2.    In the course of hearing before us, Ld. Standing Counsel for the

revenue submitted at the outset that ground No. 1 was not taken up by
                                       4
                                           ITA Nos. 5018 to 5022 & 5059/M/2010


the assessee either before the AO or the Ld. CIT(A). In this connection, he

furnished the grounds taken before us and the grounds taken before the

Ld. CIT(A) in a tabular form, which is reproduced below to the extent it is

relevant to us :



      Form No. 36                              Form No.35
      Grounds of Appeal                        Grounds of Appeal
                                       1       Disallowance on Deduction u/s
                                               80IA (4) of ` 1,25,77,537/-
      On the facts and in the                  The Learned DCIT erred in
      circumstances of the case                disallowing    the   claim  of
      and in law, the CIT(A) erred             deduction u/s 80IA 4) of `
      in not appreciating that the             1,25,77,637 on the reasoning
      order      passed   by     the           that Container Freight Station
      Assessing Officer is without             (CFS) are not Inland Ports
      jurisdiction and bad in law as
      the jurisdiction u/s 153A is
      vitiated


      The Commissioner (Appeals) 2.            The Learned DCIT erred in
      erred in confirming the                  disallowing  the   claim   of
      disallowance of deduction of             deduction u/s 80IA(4) relying
      ` 1,25,77,637/- u/s 80IA(4) of           on a Delhi ITAT order in the
      the Act                                  case of Container Corporation
                                               of India case reported in 30
                                               SOT 284 (Delhi)

      The CIT(A) erred in relying on 3.        The Learned DCIT erred in
      the decision of the Appellate            disallowing  the   claim   of
      Tribunal in the case of                  deduction u/s 80IA(4) already
      Container Corporation on                 granted in the order passed
      India Ltd. vs. ACIT [30 SOT              u/s 143(3) dated 30.12.2006
      284      (Delhi),      without           which is merely change of
      appreciating that the facts in           opinion.
      the    present    case     are
      different from that of the
      aforesaid case.


2.1   It is submitted that the grounds taken before the Ld. CIT(A) did not

deal in any manner with the jurisdiction or absence thereof u/s 153A of
                                     5
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


the Act. However, ground No. 1 taken before the Tribunal is to the effect

that the Ld. CIT(A) erred in not appreciating that the order passed by the

AO is without jurisdiction and bad in law as the jurisdiction u/s 153A is

vitiated. Since such ground was not taken before Ld. CIT(A), his decision

is not available in this matter. Consequently, it is argued that ground No.

1 does not arise out of the order of lower authorities. The questions

referred to the special bench cannot be answered in isolation de hors the

grounds taken by the assessee in appeal. Therefore, finding will have to

be given whether ground No. 1 before the Tribunal is additional ground,

which requires to be admitted with the leave of the Tribunal. On the other

hand, the submission of the Ld. Counsel for the assessee has been that

this ground has been taken in the memorandum of appeal and, therefore,

it is not an additional ground. Further, he drew our attention towards

ground No. 3 taken before the Ld. CIT(A) that Ld. DCIT erred in disallowing

the claim of deduction u/s 80IA(4) already granted in order passed u/s

143(3) dated 30.12.2006 which is merely change of opinion. His argument

is that though the language employed in this ground is different from the

language employed in ground No. 1 taken before Tribunal, yet in essence

they are similar in nature. In the alternative, it is submitted that even if

ground No. 1 does not arise out of the order of the Ld. CIT(A), it is purely

a legal ground in respect of which all facts are available on assessment

record. Therefore, this ground may be admitted, although it is reiterated

that ground is not an additional ground as it has been taken up in the

memorandum of appeal. The rival parties vehemently argued that this
                                     6
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


issue ought to be disposed off by passing an interim           order so that

respective parties may take legal remedy as available, if found necessary.

In view of this insistence of both the parties, we proceed to determine this

issue on the basis of detailed arguments made before us.



3.    Ld. Counsel submits that an order of assessment for this year was

made earlier by the AO u/s 143 (3) prior to the conduct of search u/s

132(1) on or about 26.4.2007. This is evident from the submissions of the

assessee made before the Ld. CIT(A) recorded in paragraph No. 3.4 where

it is submitted that in the original assessment order passed u/s 143(3),

deduction u/s 80IA(4) was allowed by the AO in various years. The facts

and circumstances in so far as deduction u/s 80IA(4) is concerned remain

the same, therefore, the AO was not justified in changing the stand taken

by his predecessor on the basis of the decision of the Tribunal in the case

of Container corporation of India Limited vs. ACIT (2009) 30 SOT 284(Del).

The division bench considered this matter which is evident from the fact

that in the reference made to Hon'ble President, ITAT, it is inter alia

mentioned in paragraph 4 that the decision in the case of Container

Corporation of India Ltd., according to the assessee, is not applicable to

the facts of his case because the Tribunal considered the admissibility of

the deduction in the case of Inland Container Depot ("ICD" for short) and

not in the case of a Container Freight Station ("CFS" for short). On the

other hand, the case of the revenue is that the decision of Hon'ble

Bombay High Court in the case of CIT vs. ABG Heavy Industries Ltd.
                                     7
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


(2010) 189 Taxman 54, relied upon by the assessee, is not applicable to

the facts of this case as the assessee has claimed the income to be

derived from operation of cranes and not from infrastructure          facilities

such as ICD or CFS. The division bench also mentioned in paragraph Nos.

3.1 & 3.2 that there is a cleavage of opinion amongst different benches of

the Tribunal in respect of scope of assessment framed u/s 153A, i.e.

whether addition can be made on items in respect of which no

incriminating material is found in search. The decisions in favour and

against of the assessee have also been listed. That is why, two questions

have been referred to special bench. The issue has also been considered

by Hon'ble President, ITAT,    who has constituted the special bench to

consider the two questions. Although it is a trite to say that the decision

has to be taken on the facts and circumstances of the case, yet it is clear

that various issues have been considered by the division bench and the

Hon'ble President and, therefore, question No. 1 can not be taken as

additional ground. In any case the revenue has taken no objection at the

time of hearing before the division bench and now it is too late to take any

such objection.




3.1   Further, Ld. Counsel referred to the provision contained in section

253, which inter alia provides that the President, may for the disposal of

any particular case, constitute a Special Bench consisting of three or more

Members, one of whom shall necessarily be a judicial member and one an

accountant member. On the basis of language contained in this provision,
                                     8
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


it is argued that the President has constituted a Special Bench consisting

of three members to dispose off the questions referred to it. Therefore,

these questions are required to be disposed off by this Bench. In this

connection, reliance is placed on the decision of `H' Bench (Special Bench)

of Mumbai Tribunal in the case of Mahindra & Mahindra Ltd. vs. DCIT

(2009) 30 SOT 374 (Mumbai). The assessee sought to raise an additional

ground to the effect that the order passed by the Ld. AO u/s 185 of the Act

is void ab initio being barred by limitation. Ld. DR objected to raising the

ground and submitted that the assessee had no right to raise the question

of limitation by way of additional ground as such ground could have been

initially taken before the AO. He relied upon decision in the case of

Hindustan Times Ltd. s. Union of India AIR 1998 (SC) 688. On hearing both

the parties and considering relevant material on record, the Hon'ble

Tribunal observed that during the course of original hearing before the

Division Bench, the assessee had raised the question of limitation by way

of additional ground. The revenue approached Hon'ble President for the

constitution of Special Bench for deciding the controversy as there were

conflicting views in the matter. Therefore, the special bench was

constituted to decide the question. It has been held that it is too late in

the day for the revenue to object to the legality of admission of additional

ground at this stage, because the special bench has been constituted for

disposing off this very controversy and that too at the instance of the

revenue. It has been further held that the question of limitation goes up

the very root of the matter. If the proceedings are initiated or completed
                                     9
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


beyond the prescribed time, then such proceedings deserve to be

quashed. The legal position is that there is no embargo on any party to

raise a legal ground before the Tribunal provided that the requisite

material already exists on record and no further investigation of fact is

required. Further, reliance is placed in the case of National Thermal Power

Corporation Ltd. vs. CIT (1998) 229 ITR 383 (SC) ("NTPC" for short). It has

been held that the powers of the Tribunal in dealing with the appeals are

expressed in the widest possible terms and it has jurisdiction to examine

the question of law which arises from the facts available before lower

authorities and which has a bearing on the liability of the assessee, even if

such question has not been raised before the lower authorities. Thus, it is

argued that even if the questions involve an additional ground, it is too

late for the revenue to object to it because the matter has been

considered by the Division Bench and now these questions have to be

decided by the Tribunal as per order made by Hon'ble President. In any

case even if an additional ground is involved, the Bench has all the powers

to admit it and adjudicate upon it if all the facts necessary for such

decision are available on record of lower authorities. It is stated that all

facts are there on record and no new fact is required to be brought on

record, therefore, the ground may be admitted.


3.2.   Ld. Counsel also referred to the decision of Hon'ble Bombay High

Court in the case of J.B. Greaves vs. CIT (1963) 49 ITR 107 , in which it has

inter alia been mentioned that it is indeed true that the powers of the

Tribunal u/s 33(4) ( of the old Act) are wide. The Tribunal after giving both
                                    10
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


the parties to the appeal, an opportunity of being heard, can pass such

orders thereon as it thinks fit. The word "thereon" occurring in section

33(4) has been construed in various decisions as meaning "the subject

matter of appeal before the Tribunal". Now the subject-matter of appeal

before the Tribunal would naturally be the grounds raised by the appellant

before it. Rule 12 provides that the appellant shall not, except by the

leave of the Tribunal, is to be heard in support of any ground not set forth

in the memorandum of appeal ; but the Tribunal in deciding the appeal

shall not be confined to the grounds set forth in the memorandum of

appeal and taken by leave of the Tribunal under this rule. Rule 27 further

provides that the respondent, though he may not have filed appeal, may

support the order of the Appellate Assistant Commissioner on any of the

grounds decided against him. These are the relevant provisions relating to

the question that arises for consideration. Having regard to these

provisions, it can be mentioned that the subject matter of appeal would be

the grounds specifically raised in the memorandum of appeal, grounds

which Tribunal allows the appellant to raise, and contentions raised by the

Respondent in support of the order made by the appellate Assistant

Commissioner challenging the adverse findings against him. The scope

and ambit of these rules have been considered by the court in ITR No. 50

of 1959 (Commissioner of Income Tax vs, M/s Hazarimal             Nagji & Co.

(1962) 46 ITR 1168, decided on 6th October, 1961, wherein it has been

observed :-
                                      11
                                           ITA Nos. 5018 to 5022 & 5059/M/2010


       `Now, reading the provisions of section 33(4) and the relevnt rules
       to which our attention has been drawn by Mr. Joshi, it seems to us
       that the powers of the Appellate Tribunal are similar to the powers
       of the appellate court under the Civil Procedure Code. That also is
       the view which this court has taken in New India Life Assurance Co.
       Ltd. v. Commissioner of Income Tax {1957) 31 ITR 844 where it is
       observed that the position of the Appellate Tribunal' is the same as
       a court of appeal under the Civil Procedure Code and its powers are
       `identical' with the powers enjoyed by an appellate court under the
       "Code". Now, a respondent in an appeal is undoubtedly entitled to
       support the decree which is in his favour on any grounds which are
       available to him, even though the decision of the lower court in his
       favour may not have been based on those grounds. A respondent,
       unless he has filed an appeal himself or filed cross-objections in the
       appeal filed by his opponent, will not be entitled to challenge that
       part of the lower court's decree which is against him, and the
       appellate court will have no power or jurisdiction to permit him to do
       so. But, in so far as he only wants to maintain the decree of the
       lower court which is against the appellant and in his favoaur, he will
       be entitled to support it on fresh grounds also if he can do so, and
       the appellate court also will have jurisdiction to permit him to do so,
       provided, of course, that the fresh grounds which he wants to urge
       do not require a further investigation into facts which are not
       already on record and are not based on facts which were neither
       alleged nor admitted nor proved and which the other side was never
       called upon to meet in the lower court."




3.3.   It thus follows that the subject matter of appeal would get confined

to limits of the grounds specifically raised in the memorandum of appeal,

the new grounds raised by the appellant with the previous permission of

the Tribunal and the grounds urged by the respondent in support of

decree passed in his favour,




3.4    Based upon these decisions, it is argued that the question of

requirement of leave of the Tribunal is merely a formality in this case and

if it is necessary to grant such a leave, it may be granted.
                                      12
                                           ITA Nos. 5018 to 5022 & 5059/M/2010


3.5.    He also referred to ground No. 3 taken before the Ld. CIT(A) that the

Ld. DCIT erred in disallowing the claim of deduction u/s 80IA(4) granted in

the order passed in section 143(3) on 30.12.2006 which is merely

change of opinion (emphasis stated by the Ld. Counsel). It is urged that

the highlighted words are large enough to take into account ground No. 1

taken before the Tribunal regarding lack of jurisdiction u/s 153A, as the

grounds are to be read widely and not narrowly.




3.6     Ld. Counsel also dealt with the written submissions dated 3.5.2012

and 7.5.2012 filed by the revenue.




4.      In reply, the Ld. Standing Counsel submits that the decision in the

case of NTPC has to be read in the context of the facts of that case. The

facts are that the assessee had deposited surplus funds with banks as

short ­ term deposits. The interest received in the relevant year on such

deposits, amounting to ` 22,84,994/-, was offered for tax and the

assessment was completed accordingly. Before the Ld. CIT(A), a number

of     grounds were taken by the assessee but the inclusion of aforesaid

amount in the total income was neither challenged by the assessee nor

considered by the Ld. CIT(A). The assessee filed appeal before the

Tribunal against the order of the Ld. CIT(A), in which the inclusion of the

amount of ` 22,84,994/- was not objected to in the memorandum of

appeal. However, in letter dated 16.7.1983, the assessee took three
                                    13
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


additional grounds to effect that the aforesaid amount ought to be

deducted from the expenditure incurred during construction and it cannot

be included in the total income. It was explained that the grounds have

been taken on account of two orders passed by Special Bench of the

Tribunal in the case Arasan Alluminium Industries Pvt. Ltd. and Nagarjuna

Steels Ltd, where upon the assessee learnt that the interest earned in this

manner before setting up of the business is not a part of taxable income

as it goes to reduce capital cost of the plant. The Hon'ble court took into

account the decision in the case of Jute Corporation in India vs. CIT (1991)

187 ITR 688) (SC) and held that the view that the Tribunal is confined only

to issues arising out of the appeal before the Ld. CIT(A) takes too narrow a

view of the powers of the Appellate Tribunal. Undoubtedly, the Tribunal

will have the discretion to allow or not to allow a new ground to be raised.

But where the Tribunal is only required to consider a question of law

arising from the facts which are on the record in the assessment

proceedings, the court fails to see why such a question should not be

allowed to be raised when it is necessary to consider that question in

order to correctly assess the tax liability of an assessee. A narrow view to

which the Hon'ble court referred to had been taken in the case of CIT vs.

Anand Prasad (1981) 128 ITR 388(Delhi), CIT vs. Karamchand Premchand

Pvt. Ltd. (1969) 74 ITR 254 (Guj) and CIT Vs. Cellulose Products of India

Ltd. (1985) 151 ITR 499 (Guj) (Full Bench). The case of the Ld. Standing

Counsel is that the facts are distinguishable ; and in any case the

assessee has to furnish reasons as to why the ground was not taken
                                     14
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


before lower authorities and why it should now be admitted by the

Tribunal.



4.1   In order to support his contention, he relied on the decision of the

Mumbai Tribunal in the case of Jay Bharat Co-op. Housing Society Ltd. vs.

ITO (2011) 10 ITR (Trib.) 717, in which it has been inter alia held that the

judgment in the case of NTPC was rendered on the facts of the case, i.e.

during the course of appellate proceedings, the legal position on the issue

changed on account of judgments of the Appellate Tribunal. In these

circumstances, the assessee was allowed to raise a new ground before the

Tribunal and it was held that the Tribunal can admit a new ground if all

facts relating to the issue are available before Tribunal and no

investigation or verification of the fact is required. It is argued that there

is no change in position of law and Ld. Counsel has not referred to the

facts and completeness thereof, which do not require any further

investigation or verification.



4.2   Further, he relied on the decision of Hon'ble Bombay High Court in

the case of Pokhraj Hirachand (1963) 49 ITR 293. Briefly speaking, the

facts are that the question raised before the Tribunal was ­ whether,

payment made by the assessee to Milkhi Ram R Goyal was capital or

revenue in nature? The Tribunal held that the payment is revenue in

nature. Further the Tribunal held that the entire amount has not been paid

to Milkhi Ram but only a part thereof has been paid, therefore, the
                                    15
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


deduction was allowed only for that part of the payment which had been

actually made. The Hon'ble court held that in the statement of the case,

the Tribunal had not stated that the departmental representative or the

Income Tax Officer had raised any contention in respect of quantum of

payment before it. If it is the correct position that the Income Tax Officer

or the departmental representative had raised any such contention before

the Tribunal, it will be a reasonable to assume that the Commissioner

would have seen that this fact is incorporated in the statement of the

case. This being the position on record, the Tribunal was in error in

dealing with the question about the quantum of payment made to Milkhi

Ram. The submission of the Ld. Standing Counsel, on the basis of this

judgment, seems to be that there is no mention about consideration of

jurisdictional aspect in the order of the Ld. CIT(A) and, therefore, the

question does not arise from the order of the lower authorities.



4.2.1 In this context, he referred to the provision contained in section 253

(1), which starts with the words " any assessee aggrieved by any of the

following orders may appeal to the Appellate Tribunal against such order "

(emphasis supplied by the Ld. Standing Counsel). It is argued that the

question was never taken up before the lower authorities, therefore, it

cannot be said that the assessee is aggrieved by the impugned order,

therefore, the assessee could not have taken ground No. 1 as it exists in

the memorandum of appeal. Thereafter, he referred to the provision

contained in section 254 (1), which states that ­ "the appellate Tribunal
                                       16
                                            ITA Nos. 5018 to 5022 & 5059/M/2010


may pass after giving both the parties to the appeal an opportunity of

being heard, such orders thereon as it thinks fit (emphasis supplied by

the Ld. Standing Counsel). It is argued that the appellate Tribunal has to

confine itself to the grounds taken in the memorandum of appeal,

additional ground taken by the assessee which are permitted by the

Tribunal and any other ground taken by the defendant with a view to

support the impugned order. Thus, the Tribunal can deal with ground No.

1 only if it is taken as an additional ground and admitted by the Tribunal

by granting leave.



4.2.2 It is submitted that the Tribunal may be pleased not to grant such a

leave because no reason has been advanced for not raising the ground

before any of the lower authorities.



4.3   Ld. Standing Counsel also submits that if the ground is allowed to be

proceeded with as the ground taken in memorandum of appeal or the

additional ground and decided in favour of the assessee, it will lead to

grave peril to the revenue. In this connection, our attention has been

drawn to paragraph No. 5 of the assessment order, in which it is

mentioned that in the return filed u/s 153A consequent upon the search,

the assessee has declared additional incomes of ` 26,85,850/- and `.

3,50,000/-, being part of general offer u/s 132 (4) of undisclosed income

made to cover any error / omission / discrepancy not noticed at the time

of conducting the search. The sum of ` 26,85,820/- consists of `
                                     17
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


23,05,528/- disallowed by the AO on account of conveyance and other

expenses in the original assessment made u/s 143(3) on 30.12.2006, and

the balance of ` 3,80,292/- is on account of reduction in the claim made

u/s 80IA. The revenue does not have objection to the decision regarding

deduction u/s 80IA(4) on merits. However, if the order u/s 153A is held to

be beyond jurisdiction, the incomes offered by the assessee suo moto in

the return will also get deleted as status quo ante shall prevail. Such a

position cannot be allowed to be obtained in view of the decision of

Hon'ble Andhra Pradesh High Court in the case of CIT vs. Late Begum

Noor Banu Alladin (1993) 204 ITR 166 (AP) (Full Bench). He referred to the

head notes where it is mentioned that the jurisdiction of the Tribunal is

necessarily restricted to subject ­ matter of the dispute before the first

Appellate Authority and the Tribunal cannot allow the assessee or the

department to dispute new items or entertain claims of deduction for the

first time. If the assessee is precluded from taking a new ground unrelated

to subject ­ matter before the Appellate Assistant Commissioner, he

cannot avail of Rule 11 of the ITAT Rules and obtain the leave of the

Tribunal to raise a new ground for the first time. Occasional injustice is no

ground to mould the interpretation in favour of the assessee and the

arguments based on equity and justice are something like double-edged

weapon which cut both ways. Consequently it has been held that it is not

competent to allow additional plea of the assessee if it was not subject ­

matter of the dispute before the Appellate Assistant Commissioner. The

Hon'ble court considered a large number of decisions, some approved,
                                    18
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


some overruled, some dissented from, some concurred with, and some

relied upon. This position has been summarized in the summery of the

ruling furnished by the publisher. It will be fruitful to reproduce this

summary :-


CIT vs. Krishna Mining Co. (1977) 107 ITR 702 (AP) approved ; CIT vs.
Gangappa Cables Ltd. 1978 CTR (AP) 332 : (1979) 116 ITR 778 (AP)
overruled; Ahmedabad Electricity Co. Ltd. vs. CIT (1992) 106 CTR (Bom)
(FB) 78: (1993)      199 ITR 351(Bom) (FB), State of Tamil Nadu vs.
Alumurugan & Co. (1982) 51 STC 381 (Mad) (FB), CIT vs. Indian Express
(Madurai) (P) Ltd. (1983) 33 CTR (Mad) 314 : (1983) 140 ITR 705 (Mad.),
CED vs. Brahadeeswaran (1986) 57 CTR (Mad.) 162 : (1987) 163 ITR 680
(Mad.) , CIT vs. Kerala State Co-operative Marketing Federation LTd.
(1991) 100 CTR (Ker) 230 : (1992) 193 ITR 624 (Ker.) CIT vs. Pratapsingh
(1986) 57 CTR (Raj.) 291 : (1987) 164 ITR 431 (Raj.), ITAT vs. B. Hill & Co.
(P) Ltd. (1982) 29 CTR (All) 301 : (1983) 142 ITR 185 (All.), Atlas Cycle
Industries Ltd. vs. CIT (1981) 21 CTR (P &H) 109 : (1982) 133 ITR 231 (P &
H) Taylor Instruemtns Co. (India) Ltd. vs. CIT (1992) 105 CTR (Del) 5 :
(1992) 198 ITR 1 (Del) and Hindustan Malleables & Forgings Ltd. vs. CIT
(1991) 191 ITR 110 (Pat) dissented from ; CIT vs. Steel Cast Corporation
(1977) 107 ITR 683 (Guj.), CIT vs. Karamchand Premchand PVt. Ltd. (1969)
74 ITR 254 (guj.) CIT vs. Cellulose Products of India Ltd. (1985) 44 CTR
(Guj) (FB) 278 : (1985) 151 ITR 499 (Guj), (FB), Hukum Chand and
Mannalal Co. vs. CIT (1980) 126 ITR 251 (MP) and Ugar Sugar Works Ltd.
vs. CIT (1982) 27 CTR (Bom) 174 : (1983) 141 ITR 326 (Bom.) CIT vs.
Anand Prasad (1981) 128 ITR 388 (Del) and Panchura Estate Ltd. vs. Govt.
of Madras (1973) 87 ITR 698 (Mad.) concurred with ; State of A.P. vs. Sri
Venkata Rama Lingeshwara Rice Mill (1977) 39 STC 57 (AP) (FB) relied on;
Shaik Ibrahim vs. CIT (1968) 69 ITR 117 (AP) explained




4.4.   It has been mentioned that the finding of the Tribunal is that the

income in question cannot be assessed to tax in the assessment year in

which it was taxed or in any other previous year because the time for

reopening or reducing the assessment of that previous year has expired

by now. Consequently the admitted income is going out of the net of the

taxation, which is not equitable in law unless the assessee is entitled to
                                     19
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


relief by virtue of a clear legal provision, which is not so. It has further

been mentioned that if such position is accepted, a number of assesses

may be put to the peril of being exposed to the appeal by the revenue

even though the ITO may not have applied to the AAC to enhance the tax.

The arguments based on equity and justice is a double-edged weapon

which cuts both ways. The Hon'ble Court referred to the decision in the

case of Karmchand Premchand Pvt. Ltd. and Shri Venkata Rama

Lingeshwara Rice Mill (supra) to the effect that the Tribunal has no

jurisdiction to allow such grounds to be raised for the first time before it

and that the Tribunal has misconstrued the reasoning in the case of

Mahalaxmi Textile Mills Ltd. It has also been mentioned that so long as the

item in dispute and the amount on which relief claimed remain the same,

it is open to the assessee to raise an additional or alternative ground. But

this power does not extend to decide a totally new item of dispute, thus,

the decision in the case of Jute Corporation of India Ltd. (supra) has

wrongly been pressed in the service of the assessee as the case dealt with

the powers of the AAC and not the Tribunal. The court noted that the Apex

Court pointed out in un-mistakable terms that the jurisdiction of the

Tribunal must be confined to subject-matter of an appeal. The Tribunal

has sufficient powers to remand the case to the ITO but the details do not

support the assessee's contention, rather they go against her. In the case

of Mahalaxmi Textile Mills Ltd,.(1967) 66 ITR 710 (supra), the ITO

disallowed the claim of the assessee for development rebate because

according   to   him   Casablanca   conversion     system    did   not   involve
                                    20
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


installation of new machinery. This order was upheld by the AAC. Before

the Tribunal, it was claimed for the first time that the claim was allowable

either as development rebate or current repairs. The Tribunal accepted

the alternative claim. It was observed by the Hon'ble Court that on

investigation of true nature of alterations made by the introduction of

Casablanca Conversion System, the Tribunal came to the conclusion that

it did not amount to installation of new machinery, but it amounted to

current repairs. Considering this decision, the Hon'ble Andhra Pradesh

High Court mentioned that in this case subject-matter of appeal was the

same. The item was the same and the quantum of income was the same.

However, the facts of the case of the assessee are different. In the case

of CIT vs. S. Nelliappan(1967) 66 ITR 722 (SC), it was contended that the

ground permitted to be raised relates not only to a new issue but a new

item unrelated to original subject ­ matter. However, such is not the case.

The AO had rejected the books of account and additions had been made

to the book profits. Cash credits were also added. It was urged before the

High Court that once additions have been made to the book profits on

account of suppression of income, the additions for unexplained cash

credit were not called for. In this case also the Tribunal had not given any

relief travelling beyond the true subject matter of appeal. In the case of

Karamchand Premchand Pvt. Ltd. it was held that there must be a

decision of the AAC by which the assessee or revenue is aggrieved before

an appeal can be preferred. These observations may convey the

impression that an assessee who did not raise a particular dispute before
                                     21
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


the AAC cannot be said to be aggrieved by this order therefore, he cannot

file appeal. This may not be a correct approach to the problem. If the

assessee is aggrieved by any part of the order of the AAC, he is aggrieved

in that sense and he can maintain an appeal. In the case decided by

Gujarat High Court and in this case, the assessee can be said to be

aggrieved against the order of the AAC because he did not get relief in

respect of matter agitated before him. Therefore, there is no bar for filing

an appeal to the Tribunal. Of course, if the appeal is allowed by the AAC,

it will not be open to the assessee to file the appeal because he cannot be

said to be aggrieved by that order. Once the assessee or the ITO files an

appeal, the points which could be raised or allowed to be raised is of

course a different matter, whose answer depends upon the scope and

subject matter of appeal and the extent of relief that could be granted by

the Tribunal. Referring to the case of Hukumchand and Mannalal Co. v. CIT

(1980) 126 ITR 251 (MP), it is mentioned that jurisdiction of the Tribunal is

restricted to subject ­ matter of the appeal and this principle has not been

digressed from in any later case. The words " pass such order as the

Tribunal thinks fit" could only mean the orders in respect of subject-

matter which could be dealt with by the Tribunal and these words are not

relevant to fire up the scope and subject-matter of appeal before the

Tribunal. Therefore it is necessary to find out as to what could the real

subject-matter of appeal before the Tribunal. In the view of the court, it

could not be anything different from the subject-matter before the AAC

and necessarily it should be something which arises out of the order of the
                                     22
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


AAC. But there is no taboo against raising a new ground or a new plea

touching the same subject matter. This view finds support from the

decision in the case of Steel Cast Corporation ; & CIT vs. Cellulose

Products of India Ltd. (1985) 151 ITR 499 (Guj.) (FB) .




4.5   In the case of Additional Commissioner of Income Tax vs.

Gurjargravures P. Ltd. (1978) 111 ITR 1(SC), the revenue was aggrieved

by the order of the Tribunal in which Tribunal entertained the question of

relief u/s 84 and directed the AO to allow necessary relief. High Court

upheld the order of the Tribunal. It was mentioned that neither any

submission was made before the AO nor there was any material on record

in support of such claim, therefore, the High Court should have answer the

question in the negative i.e. against the assessee and in favour of

revenue.




4.6   In the case of Commissioner of Income-tax vs. V.K. Sood Engineers

and Contractors (P.) Ltd. [2003] 264 ITR 313 (P&H), it has been held that

the Tribunal was not right in observing that the grounds of appeal filed in

September, 1998, were not acceptable because the same had not been

approved by the Commissioner of Income Tax. Rule 9 (1) contains the

requirement of filing of specified documents alongwith memorandum of

appeal , but sub ­ rule (3) thereof gives ample discretion to the Tribunal to

accept the memorandum of appeal even if it may not be accompanied by
                                            23
                                                 ITA Nos. 5018 to 5022 & 5059/M/2010


all or any of the specified documents. These rules are procedural in character.

Therefore, the failure of the Department to file grounds of appeal on May 6, 1994, should

not have been made a ground for dismissing the appeal in limine, more so because in

response to the show cause notice issued by the Tribunal, the grounds of appeal duly signed

by the Assistant Commissioner of Income-tax (Investigation Circle-II), Chandigarh, had been

filed. Ld. Sr. Standing Counsel submits that the instant case does not

involve procedural law but substantive law and for taking any such

ground, the assessee has to show that it is aggrieved by the order of the

Ld. CIT(A) as understood u/s 253(1). In the case of Aravali Engineers Pvt.

Ltd., vs. CIT(2011), 335 ITR 508 (P & H) the assessee was prosecuting

appeal before the Tribunal in respect of setting off of some losses against

income from house property. According to the AO ,the losses occurred in

speculative business and, therefore, such set off could not be granted.

The assessee also took up an additional plea that notice u/s 143(2) was

not served upon it within the statutorily prescribed time limit. The Tribunal

held that the assessee did not raise this plea earlier inspite of

opportunities granted to it. Therefore, such a plea could not be raised for

the first time before the Tribunal. The court dismissed the appeal of the

assessee by mentioning that no doubt an appellate authority can allow a

question to be raised for the first time even if such question was not

raised at lower forum, but such discretion has to be exercised in the

interest of justice and not mechanically. The question of fact may not be

allowed to be raised for the first time as it may lead to prejudice to the

other side. The decision in the case of NTPC does not lay down that in
                                     24
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


every case, the question of fact can be mechanically allowed to be raised

for the first time. In view of this decision, it is argued that the question

now raised by the assessee cannot be allowed to be raised mechanically

without going into the reasons as to why the assessee did not raise this

issue before the AO or the Ld. CIT(A). In any case , further referring to the

decision in the case of Maruti Udyog Ltd. Vs. ITAT and Ors (2000) 244 ITR

303 (Delhi), it is argued that the Tribunal has to record reasons and it is

open to the parties to take such pleas as are available to them for taking

up before the Tribunal on the question whether the additional ground

should be permitted to be urged or not.




5.    In the rejoinder reply, the Ld. Counsel reiterated that the Ld.

Standing Counsel is arguing against the mandate of the President. Coming

to the merits, it is submitted that the decision in the case of Late Begum

Noor Banu Alladin was not considered in the decision in the case of NTPC

even though the former decision was rendered on an earlier date.

However, that does not make any difference to the situation for the

reason that the latter decision has been rendered by the Apex Court. The

decision unequivocally lays down that where the Tribunal is only required

to consider the question of law arising from the facts which are on record

in the assessment proceedings, the court fails to see why such a question

should not be allowed to be raised, when it is necessary to consider that

question in order to correctly assess the tax liability of the assessee. This

decision takes care of the word "aggrieved", used in section 253 (1).
                                     25
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


There could be many reasons to raise additional ground. In this case, the

ground is raised for the first time before the Tribunal as the assessee was

not property advised when the case was being represented before the AO

and the Ld. CIT(A).The assessee did not have services of an advocate at

that time.




5.1   Coming to the decisions relied upon by the Ld. Standing Counsel, it

is submitted that the decision in the case of Padma Sundara Rao (Dead)

and Others vs. State of TN and Others (2002) 3 SC 533 is not relevant in

the context of the facts of this case. In paragraph No. 9 it is mentioned

that courts should not place reliance on decision without discussing as to

how the factual situation fits in with the fact situation of the decision on

which reliance is placed. There is always peril in treating the words of a

speech or judgment as though they are words in a legislative enactment

and it is to be remembered that judicial utterances are made in the

setting of the facts of a particular case. Therefore, the effect is that the

Tribunal has to examine the facts of this case and thereafter decide

whether ground No. 1 is an additional ground and if yes whether it should

be admitted or not. Further, the facts in the case of Jay Bharat Co-

operative Society Ltd. are completely different as the issue required

verification of facts as the relevant facts were not available on the record.

If the question had been admitted, the matter had to go back to the AO

for verification. The decision however fails to take into account the

observations of Hon'ble Supreme Court in the case of Goetze (India) Ltd.
                                    26
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


vs. CIT (2006) 284 ITR 323 (SC). This decision specifically mentions that it

does not in any way relate to the power of the Tribunal as any question of

law can be raised for the first time before the Tribunal in view of the

decision in the case of NTPC.




5.2   Coming to the facts of the case, it is submitted that a sum of `

26,85,820/- had already been disallowed by the AO in the proceedings of

assessment year 2004-05. No incriminating material had been found in

regard to the deduction u/s 80IA(4) in the course of search. The assessee

had already taken ground No. 3 before the CIT(A) challenging the action of

the AO in disallowing the deduction. The present ground is in furtherance

of the same ground which the assessee can validly take in the light of the

decision in the case of Shaik Ibrahim vs. CIT, (1968) 69 ITR 117 (Andhra

Pradesh) wherein it is mentioned that the mere fact with the assessee, not

having appreciated his legal rights failed to raise the contention before

the ITO or the AAC, where he was not represented by a lawyer but by his

auditor who not being qualified in law, was not competent to appreciate

the principles of law or its subtleties, cannot be denied the right to raise

that question at the stage of the appeal before the Tribunal, which is also

a forum both on question of fact as well as law.
                                     27
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


5.3   Coming to the decision in the case of Late Begum Noor Banu

Alladin, it is argued that the decision is primarily based on the decision in

the case of Karamchand Premchand PVt. Ltd.. This decision and the

decision in the case of Anand Prakash and Cellulose Products of India Ltd.

have not been approved by the Apex Court in the case of NTPC. In this

very connection, he also referred to the commentary by Kanga, Palkhivala

& Vyas, volume II, page Nos. 2318 and 2319, dealing with raising new

questions . Under the heading         "Grounds not taken before lower

authorities", it is mentioned that the Tribunal has jurisdiction to allow any

new question to be raised for the first time in appeal before it and it

should allow such question to be raised if it can be decided on the basis of

facts already on the record. In the footnote it is mentioned that the

decision in the case of Late Begum Noor Banu Alladin is not good in view

of the decision in the case of NTPC. The decision in the case of

Gurjargravures P. Ltd. (supra) is distinguished by referring to the facts

that there was neither any claim made before the ITO nor there was any

material on record to support the claim. Therefore, the facts necessary for

deciding the issue were not on record. This decision is also in conflict with

the decision of Hon'ble Supreme Court in the case of CIT vs Kanpur Coal

Syndicate 53 ITR 225 (SC), in which it has been held that the powers of

the ITO and the First Appellate Authority are coterminous. In any case this

decision deals with the powers of the AAC analogues to the powers of

CIT(A). The powers of the Tribunal have been expressed in widest terms

as held in the case of NTPC. The decision in the case of CIT vs. Godavari
                                     28
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


Sugar Mills Ltd, vs. CIT, ITR 45 of 1977 (1993) 199 ITR, 351 (Bombay)

(Full Bench) makes a reference to the decision in the case of

Gurjargravures P. Ltd. and it has been explained that the Hon'ble

Supreme Court in that case was not called upon to consider a case where

the assessee had failed to make a claim although there was evidence on

record to support it ; nor it was called upon to consider a case where a

claim was made but there was no evidence or insufficient evidence

adduced in support of the claim, This judgment also deals with the

decision in the case of Ugar Sugar Works Ltd. vs. CIT (1983) 141 ITR 326,

which had followed the decision in the case of Karamchand Premchand

Pvt. Ltd. It is mentioned that distinction has to be made between the

jurisdiction of AAC and the Tribunal. The decision in this case, it is argued,

should not be followed      as the same is contrary to the decision of

Supreme Court and Bombay High Court referred to earlier.




5.4   In the case of Pokhraj Hirachand, the question before the Tribunal

was whether, a particular expenditure was of capital or revenue nature?

However, the Tribunal also recorded a finding that actual payment was of

lower amount than claimed by the assessee. The Hon'ble High Court

noted that the statement of case does not mention anywhere that the

departmental representative or ITO has raised any contention in respect

of the quantum of the payment, therefore, it will be reasonable to assume

that the Commissioner had incorporated all facts in the statement of the

case. This being the position , the Tribunal could not have dealt with this
                                    29
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


question. The case of the Ld. Counsel is that the question is being raised

by him and, therefore, the ratio of this case is not applicable. In the case

of JB Greaves (supra). It was contended before the Tribunal that the AAC

erred in holding that assessee had earned capital gain as a result of

transfer of managing agency, the reason being that the transaction was

neither of sale nor transfer. The AAC had found that the transaction

resulted in loss. The Tribunal observed that the finding of the AAC in this

respect was not correct having regard to various aspects of the case

including that the value of share of the Company as on 1.1.1939 could not

be more than 60% of what it was at the time of sale. The Hon'ble Court

mentioned that the material fact to be seen is the actual contract between

the parties. The agreement was one of sale of managing agency. This

object was achieved by resignation of the assessee from the appointment

of managing agency. Therefore on perusal of documents, it would

transpire that the transaction was one of sale of shares           as well as

managing agency. This agreement had been performed by the assessee

as it resigned from the Managing Agency Office. In this situation, the

authorities were justified in holding that the provisions of section 12B of

1922 Act were attracted. Consequently, the subject matter of appeal

would get confined to limits of the grounds specifically raised in the

memorandum of appeal, new grounds raised by the appellant with the

previous permission of the Tribunal and the grounds urged              by the

respondent in support of the decree passed in his favour. The case of the

Ld. Counsel is that the ground has been specifically raised by the
                                    30
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


assessee in the memorandum of appeal, therefore, it has to be decided as

such.




5.5     The alternative submission of the Ld. Counsel is that in case the

Tribunal holds that this is an additional ground, it may be admitted in the

light of decision in the case of NTPC as no further facts are required to be

found.




5.6     Ld. Counsel also relied on some additional cases, which were not

cited in the course of his main presentation. In the case of Mohan Dairy vs

Union of India (2007) 163 Taxman 274(All), the assessee sought to raise

additional ground that the assessment proceedings and consequential

assessment order are without jurisdiction and barred by limitation, in view

of non-service of notice u/s 143(2) within the period allowed as per

provision to section 143(2). It was argued that non-service of notice within

the prescribe time may be correct, but this aspect of the matter has to be

adjudicated by the Tribunal after entertaining the ground ; The case of the

Ld. Counsel was that the application for additional ground may be

allowed. In these circumstances, the Tribunal was directed to permit the

petitioner to add the additional ground. In the case of V.K. Jain vs. CIT

(1975) 99 ITR 349 (P &H), the facts are that the assessee filed his return

on 28.3.1969, which was valid return u/s 139 (4). Oblivious of this

provision ITO treated return as invalid and no order was passed thereon.
                                     31
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


Thereafter a notice u/s 148 was issued in response to which the assessee

filed a return. This return showed loss of ` 4128/-,as shown in the first

return. The assessment was completed on total income of ` 32431/-. The

question before the Hon'ble High Court was ­ whether, the Tribunal was

justified in refusing to consider the validity of notice u/s 148 even though

the ground challenging the same had not been pressed before AAC? The

court came to conclusion that the ITO did not dispose of the return

voluntarily filed by the assessee but proceeded to take action u/s 34

(equivalent to section 147 of 1961 Act). The notice issued in pursuance of

section 147 is invalid and, therefore, entire proceedings would become

void. In such a situation, the Tribunal was bound to hear the assessee in

this matter. In the case of West Bengal State Electricity Board vs. DCIT

and another (2005) 278 ITR 218 (Calcutta), two points were raised by the

assessee i.e. the interest charged u/s 201 (IA) was discretionary. in nature,

and ii) The officer who passed the order had no jurisdiction thereby

rendering the order as null & void. The question regarding jurisdiction was

taken up for the first time before the Tribunal. The court came to the

conclusion that no fact needs to be gone in to for deciding this issue and it

is purely a question of law, which goes to the root of the matter. Such a

question can be admitted by the Tribunal for the first time in the light of

the decision in the case of NTPC. In the case of Orissa Cement Ltd. (2011)

250 ITR 856 (Del), the assessee raised additional grounds before the

Tribunal in respect of the claim of deduction u/s. 80E. These were rejected

by the Tribunal on the ground that they did not arise out of the order to
                                     32
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


the AAC. The Hon'bvle Court held that the Tribunal had discretion to allow

or not allow to include the grounds. But where it is required to decide a

question of law for which all facts are on record in the assessment

proceedings, there is no reason as to why such a ground should not be

allowed to be raised. In other words, the decision in the case of NTPC has

been followed.




6.    Ld. Counsel was permitted to state additional cases in the course

of rejoinder reply. Therefore, the Ld. Standing Counsel was permitted to

deal with these cases. It is submitted that the question in the case of V.K.

Jain was whether assessment had to be completed on a belated return

and pending that notice u/s 148 could not be issued, thus, the facts are

distinguishable. In the case of Mohan Dairy the facts regarding non

service of notice were on record. In the case of Orissa Cement Ltd., all the

facts in regard to the deduction u/s 80E were on record. Similarly in the

case of West Bengal Electricity Board all facts were on record. However, in

the instant case, all facts are not on record. What is available on the

record of lower authorities is the fact in respect of deduction u/s 80IA. The

facts regarding jurisdiction u/s 153A are not on record. Therefore, it is

argued that the ground may not be allowed to be raised.




7.    We have considered the facts of the case and submissions made

before us. We have also considered various cases cited by both the
                                     33
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


parties. We find that four questions have to be answered for deciding the

controversy at hand. The first question is ­ whether, question no. 1 raised

before the Tribunal is the same or substantially the same as question No.

3 raised before the Ld. CIT(A) ? The submission of the Ld. Counsel is that

the ground in appeal should be widely read             and it should not be

construed narrowly. The ground taken before the Ld. CIT(A) had been that

the   Ld. DCIT erred in disallowing the claim of deduction u/s 80IA(4)

already granted in order passed u/s 143(3) on 30.12.2006 which is merely

change of opinion. Thus the plea of change of opinion had indeed been

taken up before the Ld. CIT(A). The ground before the Tribunal is that the

Ld. CIT(A) erred in not appreciating that the order passed by the AO is

without jurisdiction and bad in law as the jurisdiction u/s 153A is vitiated.

It is argued that the substance of ground no. 3 before the Ld. CIT(A) is that

in case of a completed assessment u/s 143(3), the assessment can not be

altered to the disadvantage to the assessee merely on account of change

of opinion, i.e. there should be tangible material on record on the basis of

which disadvantage may be caused to the assessee. The search, on the

basis of which the assessment is made u/s 153A, has not revealed any

incriminating material in so far as claim of the assessee u/s 80IA (4) is

concerned. Therefore, the addition made is merely on change of opinion.

In other words the AO did not have jurisdiction to make assessment ( or it

should be read adverse assessment) against the assessee. On the other

hand, the case of Ld. Standing Counsel is that question of admissibility of

deduction u/s 80IA(4) is completely different from the question of
                                     34
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


jurisdiction u/s 153A. as the former question deals with the merits of the

case u/s 80IA(4) in the assessment / reassessment proceedings ,while the

latter question bars the jurisdiction even to make assessment, i.e. lack of

jurisdiction u/s 153A renders the notice under this provision vitiated. We

find that the two questions do not deal with the same subject. The

question before the Ld. CIT(A) had been that income quantified in order

passed u/s 153A by disallowing deduction u/s 80IA(4) is against the law as

it is based on change of opinion. On the other hand, the question before

us is whether the whole of order passed u/s 153A is bad in law because

the AO did not have jurisdiction u/s 153A. On bare perusal of section

153A, we find that the provision starts with non obstante clause in respect

of sections 139, 147, 148, 149, 151 and 153 ; and it provides that where

search has been initiated u/s 132 or books of account, other documents or

any assets or cash etc. have been requisitioned u/s 132A after 31.5.2003,

the AO shall proceed in the manner provided in clause (a) and clause (b)

of this sub-section. Clause (a) is regarding issue of notice to such a person

to require him to furnish the return of income. Since the provision

overrides section 147 and section 148, we shall refrain from taking

analogy from these provisions for the purpose of assessment or

reassessment u/s 153A. However, the provision clearly empowers the AO

to issue notice in a case where search is initiated after 31.5.2003. This

condition is satisfied in the instant case. Therefore, we are not in a

position to pursuade ourselves to agree with the Ld. Counsel that the two

questions or more or less the same, even when question No. 3 before the
                                    35
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


Ld. CIT(A) is read widely. The question before the Ld. CIT(A) may be in

regard to jurisdiction to disallow deduction already granted and in respect

of which no material has been found in search. However question No. 1

before us is an upfront question which debars jurisdiction u/s 153A all

together. The question is qualitatively different from the question raised

before the Ld. CIT(A). Thus we are not able to sustain the submissions of

the Ld. Counsel in this behalf.




7.1   Secondly, the ld.Standing Counsel has raised a plea that barring the

jurisdiction would lead to a conclusion that proceedings u/s 153A are all

together bad in law. This would mean that income voluntarily surrendered

by the assessee in the return u/s 153A, on which tax has been paid, will

have to be refunded to the assessee. This will amount to great prejudice

to the revenue as even admitted tax will have to be refunded on the basis

of interpretation sought to be placed by the ld. Counsel on the statutory

provision. On the other hand, Ld. Counsel has drawn our attention to the

provision contained in clause (b) of section 240 to the effect that if an

order of assessment is annulled the refund shall become due only of the

amount, if any, of the tax paid in excess of the tax chargeable on the total

income returned by the assessee. It is submitted that the assessee had

himself disallowed certain amounts including a sum of ` 3,50,000/- in

respect of claim u/s 80IA. Tax has been paid by way of self assessment on

filing the return u/s 153A. In view of the aforesaid provision, the assessee

is not entitled to the refund of the tax paid even if the assessment is
                                     36
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


annulled or held to be in excess of power granted to the AO u/s 153A. We

have considered this matter also. The provision is clear that on account of

appeal if the order of assessment is annulled, the amount paid by the

assessee at the time of filing the return is not be refunded to the

assessee. In the context of the section, the assessment will include

reassessment also. Therefore, the prejudice to the revenue, if the ground

is admitted, will only be a legal grievance not leading to loss of revenue in

so far as returned income is concerned. Accordingly this plea of the Ld.

Standing Counsel is rejected.




7.2   The third question is ­ whether, the ground taken by the assessee is

an additional ground ? The facts in this connection are that the ground

was not taken before Ld. CIT(A) or AO. Thus, no order is available from the

lower authorities on this issue. The case of the Ld. Counsel is rather

simple that the ground has been taken in the memorandum of appeal,

therefore, it is not an additional ground for which leave is required from

the Tribunal. On the other hand, the case of the Ld. Standing Counsel is

that the ground does not arise out of the order of lower authorities as this

question was never taken up before any one of them. We have considered

this matter also. Section 253(1) uses the words "aggrieved". A person as

appellant can be aggrieved only if the ground had been raised and it is

decided against him. It may also include a case where the ground is raised

but has not been decided by the Ld. CIT(A). Therefore, section 253(1) bars

a ground which was not raised and therefore not decided by the Ld.
                                     37
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


CIT(A). There cannot be any grievance in respect of a matter where it is

not raised at all. Further, provision u/s 254(1) under which the Appellate

Tribunal is authorised to pass order on the appeal after granting

opportunity to both the parties of being heard uses the words "pass such

orders thereon as it thinks fit". According to us this is a stage subsequent

to filing the appeal. By this time, the question regarding right of the

assessee to take certain grounds, additional grounds etc. in respect of the

appeal come to an end. Many other considerations may come into picture

before and at the time of passing the order. Thus, we will defer the

discussion on this issue and confine ourselves only to section 253(1) and

the interpretation of the word "aggrieved" for the time being. We find that

the decision in the case of Pokhraj Hirachand (supra), rendered by the

jurisdictional High Court, throws sufficient light for coming to a decision in

the matter. The facts are mentioned on page 295 of the report, which are

reproduced below :-


      "We are here concerned with the assessment year 1948-49. The
      assessee is a partnership firm consisting of six partners dealing in
      cloth and parachutes. One Milkhiram R. Goyal, who was carrying on
      business as the sole proprietor under the name and style of
      Milkhiram Brothers, was able to secure a contract for purchase of
      approximately 1,28,499 parachutes from Tata Aircraft Ltd. at the
                                       st                                th
      price of ` 93 lakhs on or about 1 November, 1946. On or about 13
      November, 1946, Milkhiram assigned to the assessee the benefits of
      the said contract of purchase of the parachutes. The terms of the
      agreement of the aforesaid transfer between the assessee and
      Milkhiram are contained in a letter addressed to the assessee by
      Milkhiram, and it is annexed as annexure "A". Now, Milkhiram
      assigned to the assessee the benefits of the said contract of
      purchase of parachutes for a consideration of ` 3 lakhs. The
      assessee paid Milkhiram passed receipt in favour of the assessee for
      the said amount of ` 3 lakhs. According to assessee, though he had
      issued two cheques in favour of Milkhiram towards the payment of
                                       38
                                            ITA Nos. 5018 to 5022 & 5059/M/2010


      the said sum of ` 3 lakhs, at the request of Milkhiram, the said
      amount was not paid by cheques, but was paid in cash, and this fact
      also is admitted by Milkhiram in his own handwriting in the form of
      an endorsement on the reverse of the said two cheques. Copies of
      the cheques along with the endorsements in the handwriting of
      Milkhiram forming part of the case are annexed as annexure "B"."
      The finding to which the Ld. Counsel for the assessee took objection and the

objections are mentioned at page No. 297 of the report, which are reproduced below

:-


      The Tribunal, however, went into the question as to whether the
      entire amount of ` 3 lakhs has been paid by the assessee to
      Milkhiram Goayl or not. The Tribunal held that the evidence on
      record does not justify a finding that the assessee had proved that
      the sum of ` 3 lakhs was paid to Milkhiram Goyal. It is held that the
      assessee only paid ` 1,87,000/- and not ` 3 lakhs to Milkhiram
      Goyal. The Tribunal therefore directed that the sum of ` 1,87,000/-
      be allowed as allowable dedusction in computing the assessable
      income of the assessee. It appears that when the appeal was heard
            th
      on 27 November, 1957, Mr. Palkhivala counsel for the assessee,
      objected to the Tribunal's going into the question as regards the
      quantum of payment, as according to Mr. Palkhivala that question
      was neither the subject matter of the appeal, nor a question raised
      by the respondent before the Tribunal. The objection raised by Mr.
      Palkhivala is stated in the following terms by the Tribunal in the
      statement of the case in paragraph 7 thereof :

             "At the time of further hearing on 27th November, Mr.
             Palkhivala, the learned counsel for the assessee, contended
             that ` 3 lakhs was a revenue expenditure and that the
             Tribunal had no jurisdiction to examine and determine the
             question of ` factum' of payment of ` 3 lakhs by the assessee,
             as the same, according to him, was not disputed by the
             income-tax authorities."
      The finding of the Hon'ble Court is that from the statement of the

case submitted by the Tribunal, it is found that the assessee had raised

objection that Tribunal had no jurisdiction to deal with the question about

the amount paid by the assessee to Milkhiram. This question was not dealt

with either by the AO or the Appellate Assistant Commissioner. The
                                     39
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


Tribunal, however, suo motu went into the question whether the whole of

the amount of ` 3 lakhs has been paid to Milkhiram. It was found that only

a sum of ` 1,87,000/- was paid to him and not ` 3 lakhs. The court held

that the contention of the Ld. Counsel for the assessee is well founded as

the factum of the payment was not disputed by the lower authorities. As

mentioned earlier, the fact is that jurisdictional question as posed before

the Tribunal had not been raised before the lower authorities. It has also

been held that question No. 3 before the Ld. CIT(A) is qualitatively

different from question No. 1 before us. Therefore, the question does not

arise out of the orders of the lower authorities. The decision in the case of

Pokhraj Hirachand becomes important in the light of the fact that the word

used in section 263 (1) is "aggrieved", and grievance can arise only if the

matter has been taken up before any of the lower authorities on which

decision has been rendered or not. However, the question which has not

been raised before any of the lower authorities and obviously not decided

by any one of them, cannot lead to a grievance in respect of which a

ground can be validly taken in the memorandum of appeal. Therefore, we

tend to agree with the Ld. Standing Counsel that ground No. 1 in the

memorandum of appeal cannot be a ground validly taken as a grievance

from the order of lower authorities. The question whether it can be

admitted as an additional ground is all together a different matter. Thus it

is held that the ground as it stands could not have been taken in the

memorandum of appeal.
                                    40
                                         ITA Nos. 5018 to 5022 & 5059/M/2010


7.3   The final question is - whether, such a ground can be raised for the

first time before the Triubunal ?




7.4   In the case of   JB Greaves (supra),     which is the decision of the

jurisdictional High Court, it has been held that the subject ­ matter of

appeal before the Tribunal would be the grounds raised by the appellant

before it. Rule 11 provides that the appellant shall not except by the leave

of Tribunal, be heard in support of any ground not set forth in the

memorandum of appeal. But the Tribunal in deciding the appeal shall not

be confined to the grounds set forth in the memorandum of appeal and

grounds taken by leave of the Tribunal. Rule 27          provides that even

though, the respondent may not have filed appeal, he may support the

order of Appellate Assistant Commissioner on any of the grounds decided

against him. Thus the subject matter of appeal consist of three elements :-

I) grounds taken in memorandum of appeal, 2) grounds for which leave is

allowed by the Tribunal, and 3) grounds taken by the respondent for

supporting the order of AAC/CIT(A). This position has also been explained

in the case of Hazarimal Nagaji & Co. decided by Hon'ble Bombay High

Court, in which it has inter alia been mentioned that the position of

Appellate Tribunal is same as that of a court of appeal under the Civil

Procedure Code and its powers are identical with the powers enjoyed by

an appellate court under the Code. Thus a respondent in an appeal is

undoubtedly entitled to support the decree which is in his favour on any

grounds which are available to him, even though the decision of the lower
                                     41
                                          ITA Nos. 5018 to 5022 & 5059/M/2010


court in his favour may not have been based on such grounds. We have

already held that a ground can be validly taken in the memorandum of

appeal only if the appellant is aggrieved by the order of AAC / CIT(A). It

has also been held that the ground No. 1 in the present appeal was never

taken before any of the lower authorities and , therefore, this ground can

not be validly taken up in memorandum of appeal. This brings us to the

question whether this ground can be taken up as additional ground with

the leave of the Tribunal. To our mind, the answer to the question is

obvious in view of the decision in the case of NTPC, decided on 12.4.1996,

after the decision was rendered in the case of Late Begum Noor Banu

Alladin on 21.4.1993. The Hon'ble Supreme Court has held with the view

that Tribunal is confined only to issues arising out of the appeal before the

CIT(A) takes too narrow a view. This view was taken in the case of Anand

Prasad , Karamchand Premchand Pvt. Ltd. and Cellulose Products of India

Ltd. This means that the ratio of these cases has not found favour with the

apex court. The decision in the case of Late Begum Noor Banu Alladin

heavily relies on the decision in the case of Karamchand Premchand and

Cellulose Products of India Ltd. If these cases have not been approved by

the Apex Court , it follows that the decision based on these cases may not

be followed by us. Further the Hon'ble Apex Court in very clear terms has

held that the Tribunal will have discretion to allow or not to allow a new

ground to be raised, but where the Tribunal is only required to consider a

question of law arising from the facts which are on record in the

assessment proceedings, it fails to see why such a question should not be
                                       42
                                            ITA Nos. 5018 to 5022 & 5059/M/2010


allowed to be raised when it is necessary to consider that question in

order to correctly assessee the tax liability of an assessee. The position of

the assessee in the case at hand is similar to the position of NTPC, as both

of them are appellants. Therefore, on the basis of the decision, it

abundantly clear that if the pure question of law arises for which facts are

on record of the authorities below, such a question should be allowed to

be raised, if it is necessary to do so to assess the correct tax liability.




7.4.1 The Ld. Counsel has submitted that this ground could not be raised

earlier as the assessee was not properly advised in the proceedings

before the lower authorities, and it did not have the services of an

advocate at his command. On perusal of record, this submission is found

to be correct. The question is one of law and not one of fact. Therefore, it

could be that a proper ground could not be raised in absence of services

of an advocate although the denial of the deduction had been disputed.

This constitutes a reasonable cause in the light of the decision in the case

of Shaik Ibrahim (supra). Thus, we find that there are reasons to hold that

the assessee could not take up this ground before lower authorities for

bona-fide reasons.




7.4.2 In view of the stated position, stated by the Ld. Counsel, that all

facts are on record, we admit ground No. 1 in the memorandum of appeal
                                         43
                                              ITA Nos. 5018 to 5022 & 5059/M/2010


for decision as an additional ground. It also follows from the decision that

no fresh fact will be entertained or examined while deciding the ground.




7.4.3. Before parting, we may add that a large number of cases have been

quoted by the rival parties , but we do not think it necessary to deal these

cases in detail here because we find that there is support available from

the decision of the Apex Court in this matter. It may however be added

that these cases have been summarised by us earlier for the sake of

completeness.


8.      The effect of the discussion is that ground No. 1 is admitted as an

additional ground.


           Sd/-                             Sd/-                        Sd/-
     [D.K. AGARWAL]               [G.E.VEERABHADRAPPA]             [ K.G. BANSAL]

     JUDICIAL MEMBER               HON'BLE PRESIDENT           ACCOUNTANT MEMBER

Dated: 21-05-2012



Veena

                                 Copy forwarded to: -
1.      Appellant

2.      Respondent

3.      CIT

4.      CIT (A)

5.      DR, ITAT     TRUE COPY                                By Order,

                                                        Deputy Registrar, ITAT
 
 
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