Appellate Tribunal : Powers and duty : A.Y. 1997-98 : Order passed relying on decision not cited in the course of arguments : Assessee to be given opportunity to deal with distinguishable features of case relied on : Matter remanded.

[Inventure Growth and Securities Ltd. v. ITAT; 324 ITR
319 (Bom.)]

In respect of the A.Y. 1997-98, the Tribunal decided an
appeal relying on the decision of the co-ordinate Bench which was not relied on
by either parties. The assessee therefore, filed a miscellaneous application
u/s.254(2) of the Income-tax Act, 1961 on the ground that the Tribunal, while
relying on the decision of the co-ordinate Bench, had not furnished an
opportunity to the assessee to deal with the decision which had not been cited
by either side when arguments were heard. The application was dismissed.

On writ petition filed by the assessee the Bombay High Court
set aside the order of the Tribunal and held as under :

“(i) It could not be laid down as an inflexible provision
of law that an order of remand on a miscellaneous application u/s.254(2) would
be warranted merely because the Tribunal had relied upon a judgment which was
not cited by either party before it. In each case, it was for the Court to
consider as to whether a prima facie or arguable distinction had been made and
which should have been considered by the Tribunal.

(ii) The distinguishing features in the case of Khandwala
Finace Ltd., which had been pointed out by the assessee were sufficient to
hold that an opportunity should be granted to the petitioner to place its case
on the applicability or otherwise of the decision in Khandwala Finance Ltd.
before the Tribunal. Therefore the appeal and the cross-objections were to be
restored for fresh consideration on the merits before the Tribunal.”