Tribunal refused to decide the fresh issue with regard to deemed dividend simply because it was raised at the appellate stage was not justified as legal issue can be raised in appeal at any point of time. Hence, order passed by the Tribunal was quashed and set aside and matter was remanded to the Tribunal for deciding the legal issue raised by the assessee.
Alternate Citation- Ravindra Arora v. ACIT (2018) 404 ITR 452 /302 CTR 174(Raj) (HC) Praveen Arora v. ACIT (2018) 404 ITR 452/302 CTR 174 (Raj) (HC)
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
In these income-tax appeals common issue is Involved, therefore, they are disposed of by this common order.
2. In both the appeals filed by the assessees, Shri Ravindra Arora and Shri Praveen Arora challenge is made to the order dated 17-8-2007 passed by the learned Tribunal, Jodhpur Bench, Jodhpur whereby the appeals filed by the appellants were dismissed.
3. The learned counsel for the appellants submits that a question of law with regard to their right under section 2(22)(e) of the Income Tax Act, 1961 was raised before the learned Tribunal but learned Tribunal, Jodhpur refused to decide the issue with regard to claim of the appellants for deemed dividend because it was raised at appellate stage.
4. Learned counsel for the appellants invited out attention towards the Judgment of learned Supreme Court in case of National Thermal Power Co. Ltd. v. CIT, decided on 4-12-1996 ((1999) 157 CTR (SC) 249–Ed.), in which the Hon’ble Supreme Court held that there is no doubt that Tribunal has 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 not on record. In the assessment proceedings, such a question should be allowed to be raised and decided by the Tribunal in order to assess correctness of the tax liability of an assessee.
5. Learned counsel for the appellants submits that in view of the aforesaid judgment, it was incumbent upon the respondent Tribunal to decide the legal issue raised by the appellants, therefore, the matters may be remitted to the learned Tribunal for deciding the question of law afresh while taking into account the section 2(22)(e) of the Income Tax Act.
6. Learned counsel for the respondent vehemently submits that detailed reasons are give by the Tribunal in para Nos. 7 and 8 of the judgment, therefore, it is obvious that Tribunal has rightly refused to decide the fresh issue raised by the appellants, hence no interference is called for in the writ petition.
7. After considering the entire facts of the case, we are of the opinion that legal issue can be raised at any point of time, in view of the judgment in the case of Notional Thermal Power Co. Ltd. (supra) in which following adjudication is made by the Hon’ble Supreme Court, in para Nos. 7 and 8 of the judgment which are as follows :–
“7. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) takes too narrow a view of the powers of the Tribunal (vide, e.g., CIT v. Anand Prasad (1981) 128 ITR 388 (Del) : TC 8R.1021, CIT v. Karamchand Premchand (P) Ltd. (1969) 74 ITR 254 (Gig) : TC 8R.547 and CIT v. Cellulose Products of India Ltd. (1985) 44 CTR (Gig)(FB) 278 : (1985) 151 ITR 499 (Guj)(FB) : TC 8R.965). Undoubtedly, the Tribunal will have the discretion to allow or not 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 we fail 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.
8. The reframed question, therefore, is answered in the affirmative, i.e., the Tribunal has jurisdiction to examine a question law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee. We remand the proceedings to the Tribunal for consideration of the new grounds raised by the assessee on the merits.”
8. In view of the aforesaid legal position of law, both the appeals are hereby allowed. The order impugned dt. 17-8-2007 passed by learned Tribunal is hereby quashed and set aside and both the cases are remitted to the learned Tribunal, Jodhpur for deciding the legal issue raised by the learned counsel for the appellants within a period of two months from the date of receiving certified copy of this order.