By Keshav B. Bhujle
Advocate
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VMT Spinning Co. Ltd. Vs. CIT; [2016] 74 taxmann.com 33
(P&H):
For
the A. Y. 2007-08, the assessee challenged assessment order before the
Commissioner (appeals) which was partly allowed. This led to filing of cross-
appeals before the tribunal i.e., one by the revenue and the other by the
assessee. In the memorandum of appeal filed before the Tribunal, the assessee
raised an additional ground with regard to calculation of minimum alternate tax
to be carried forward to the subsequent year. According to the assessee, in the
assessment order, the same had not been correctly calculated. As said ground
had not been raised before the Commissioner, the tribunal refused to adjudicate
upon the same as according to the tribunal prior leave of the tribunal through
an application in writing should have been obtained before raising the
additional ground. An oral request made by the assessee to raise said
additional ground was not considered enough.
On
appeal by the assessee, the Punjab and Harayana High Court held as under:
“i)
Appeals to the tribunal are preferred u/s. 254(1) which provides that after hearing
the contesting parties, the tribunal may
pass such orders that it thinks fit. In section 254(1) the usage of the words
‘pass such orders thereon as it thinks fit’ gives very wide powers to the
tribunal and such powers are not limited to adjudicate upon only the issues
arising from the order appealed from. Any interpretation to the contrary would
go against the basic purpose for which the appellate powers are given to the
tribunal u/s. 254 which is to determine the correct tax liability of the assessee.
ii)
Rules 11 and 29 of the income-tax (appellate tribunal) rules, 1963 are also
indicative that the powers of the
tribunal, while considering an appeal
u/s. 254(1) are not restricted only to the issues raised before it. Rule 11 of
the 1963 rules provides that the appellant, with the leave of the tribunal can
urge before it any ground not taken in the memorandum of appeal and that the
tribunal while deciding the appeal is not confined only to the grounds taken in
the memorandum of appeal or taken by leave of the tribunal under rule 11.
iii)
Rule 29, is to the effect that though parties to the appeal before the
tribunal shall not be entitled to
produce additional evidence but if the tribunal desires the production of any
document or examination of any witness or any affidavit to be filed, it can,
for reasons to be recorded, do so.
iv)
A harmonious reading of section 254(1) of the act and rules 11 and 29 of the
rules coupled with basic purpose underlying the appellate powers of the
tribunal which is to ascertain the correct tax liability of the assessee leaves
no manner of doubt that the tribunal while exercising its appellate
jurisdiction, has discretion to allow to be raised before it knew or additional
questions of law arising out of the record before it. What cannot be done, is
examination of new sources of income for which separate remedies are provided
to the revenue under the act.
v)
Rule 11 in fact confers wide powers on the tribunal, although it requires a
party to seek the leave of the tribunal. It does not require the same to be in
writing. It merely states that the appellant shall not, except by leave of the
tribunal, urge or be heard in support of any ground not set forth in the
memorandum of appeal. In a fit case it is always open to the tribunal to permit
an appellant to raise an additional ground not set forth in the memorandum of
appeal. The safeguard
is in the proviso to rule 11
itself. The proviso states that the tribunal
shall not rest its decision on any other ground unless the party who may
be affected thereby has had a sufficient opportunity of being heard on that
ground. Thus, even if it is a pure
question of law, the tribunal cannot consider an additional ground without
affording the other side an opportunity of being heard. even in the absence of
the proviso, it would be incumbent upon the tribunal to afford a party an
opportunity of meeting an additional point raised before it.
vi)
Moreover, even though
rule 11 requires
an appellant to seek the leave of the tribunal, it does not confine the Tribunal to a
consideration of the grounds set forth in the memorandum of appeal or even the
grounds taken by the leave of the tribunal. In other words, the tribunal can
decide the appeal on a ground neither taken in the memorandum
of appeal nor
by its leave. The only requirement is that the
tribunal cannot rest its decision on any other ground unless the party who may
be affected has had sufficient opportunity of being heard on that ground.
vii) in the present case, the tribunal ought to have exercised its
discretion especially in view of the fact
that the assessee
intends raising only a
legal argument without reference to any disputed questions of
fact. The matter is remanded
to the tribunal for adjudicating upon the additional ground on merits.”
