Case Law Details
RELEVANT EXTRACTS:
5. I have duly considered the rival contentions and the material on record. The facts are not in dispute that the assessee had earned commission income which was not accounted for and had also incurred certain expenditure to earn the said income and which expenditure was also not accounted for. The only dispute is whether the department can raise a fresh plea at this stage for the allowance or otherwise of the expenditure. According to the Id. A.M., the words “aggrieved” and “objects” bring out the subtle difference between the scope of appeal to be filed by the assessee and the department. In my view, the Id. A.M. has placed undue stress on these two words to arrive at the conclusion he arrived at. According to law lexicon by P. Ramanatha Aiyar (2nd Edition), the word “aggrieved” means one whose pecuniary interest is directly affected by the adjudication. An aggrieved person is a person who has suffered a legal grievance – a man against whom a decision has been pronounced which has wrongfully deprived him of something or wrongfully refused him something or wrongfully affected his title to something. Thus, the word “aggrieved” is used for a person who has personally suffered some loss on account of adjudication. Sec.253 (1) gives right to the assessee to file an appeal before the Tribunal. Sec.253 (2.) gives right to the Commissioner to file an appeal before the Tribunal. The Commissioner is acting in a fiduciary capacity on behalf of the Income-tax Department, Government of India Thus, it is the subject on one hand and the State on the other hand. In the light of the meaning of the word “aggrieved”, the citizen or the subject can be personally aggrieved by an order, but the State or the Commissioner acting for the State cannot be said to be aggrieved by an order. In fact, against the order of the appellate authority, both, the citizen as well as the State can have grievance. But considering the subtle meaning of the word “aggrieved”, it would be an inappropriate usage of English language to use the word “aggrieved” for the Commissioner. In my view, it is merely the correct usage of English language which has been employed while drafting the legislation and it has nothing to do with the scope of the appeal to be filed by the assessee and the department. It will not be incorrect to use the word “objects” for the assessee as well as the Commissioner and equally, it will not be incorrect to use the word’ “aggrieved” for both. But it is more correct to use the word “aggrieved” for the assessee and the word “objects” for the Commissioner. As a matter of fact, in the 1922 Act, Sec.33 which corresponds to the present sec.253, it did not use the word “aggrieved” at all.
Sec.33 (1) stated, “any assessee objecting to an order may appeal to the Appellate Tribunal…” Sec.33 (2) stated, “the Commissioner may, if he objects to any order direct the Income-tax Officer to appeal to the Appellate Tribunal.” Thus, it can be seen that the use of different words in the two sub-sections has no bearing on the scope of the appeal to be filed by the assessee and the department. In fact, on page 10586 in the 6th Volume of the 10th Edition of Sampath Iyengar’s Law of Income-tax, the Id. author has commented at footnote Not that though sub-section (2) uses the words “objects to”, the objection should be legitimate and arises out of some real grievance against the order.
6. Now let us examine whether the plea sought to be raised by the Id. D.R. can be admitted by the Tribunal or not. Though several authorities have been cited in the course of hearing, the basic judgment is that in the case of Hukumchand Mills (supra). In that case, in order to arrive at the correct written down value of the assets, the Tribunal permitted the department to raise a plea to find out whether the assessee was allowed any depreciation under an enactment which was in force earlier, i.e. before the Indian Income-tax Act was made applicable to the assessee. The Court held that the subject-matter of the appeal before the Tribunal was the question as to what should be the proper written down value of the assets for calculating the depreciation allowance under the Indian Income-tax Act. It was certainly open to the department, in the appeal filed by the assessee before the Tribunal, to support the finding of the AAC with regard to the written down value on any of the grounds decided against it. In the case before the Supreme Court, earlier enactment was to be referred tot whereas in the present case only a different provision of the same enactment has to be considered. Therefore, I see no reason as to why the plea of the Id. D. R. Cannot be accepted. In the-present case, of course, the department is the appellant unlike in the case of Hukumchand Mills {supra). But, in my view, it makes no difference. The department is aggrieved by the deletion of dis allowance of expenditure which disallowance was made under one particular provision. The subject-matter of the appeal was whether the expenditure claimed by the assessee was allowable or not. If it was not dis allowable under one particular provision but is dis allowable under any other provision, the subject-matter, viz., the allow ability of expenditure remains the same. There are a number of decisions in which it has been held that the Tribunal can base its decision on a ground not raised before the appellate authority or in the grounds of appeal before it but Is not bound to do so. It is not precluded from considering a point which arises out of the appeal merely because such point had not been raised or urged by either party at the earlier stage of the proceedings. Some of these decisions, only to name a few, are, CIT vs. Indian Express (Madurai) (P) Ltd. (140 ITR 705-Mad), CIT vs. Paul (AC) (A2 JTR 811-Mad) and CIT vs. Ice Supplier Corporation h4 ITR 195-Pun). In fact, the jurisdictional High Court has explained the ratio in the case of Hukumchand Mills (supra) very elaborately. It has particularly explained the following observation of the Supreme Court in the case of Hukumchand Milts (supra):
‘The Tribunal has, however, discretion not to admit any fresh plea being put forward when would involve investigation of facts.”
Explaining the above observation, the Madras High Court in the case of N.P. Saraswathi AmmaJ vs. CIT (138 ITR 19) observed as follows at page 23 of the report:
“We do not regard the last observation as a fetter on the Tribunal’s jurisdiction to admit a new plea. For; the power to listen to a new contention and decide the appeal on that basis has been spelled out by the Supreme Court from the terms of the ^Statute. The exercise of that power does not depend on the presence of any other factor, excepting that the new plea comes from a party to the appeal. Even in a case where fresh facts are called for to decide the new plea, the Tribunal would have jurisdiction to entertain that plea. How the Tribunal wishes to get at the relevant facts in order to decide the new point may be quite a different thing. The Tribunal may either remand the matter for the purpose, or proceed to investigate the facts themselves. In this part of the decision-making alone, there is scope for the play of the Tribunal’s discretion. As to the very power to entertain a new plea, that is not to be ruled out, merely because a consideration thereof would call for further facts to be gone into. In Hukumchand Mills’ decision [1967] 63 ITR 232, the Supreme Court laid down no fetter on the Tribunal’s powers. That case, indeed, was a case where the new plea raised by the department before the Tribunal could not be considered without a further investigation into facts. Nevertheless, the Tribunal entertained the plea, and remitted the case to the ITO for the ascertainment of the relevant facts. The Supreme Court, in their decision upheld not only the Department’s new plea, but also the Tribunal’s order of remand based on the new plea.”
In the light of the above discussion, I agree with the view taken by the Id. J.M. to hold that the plea raised by the Id. D. R ‘is to be accepted and the matter is to be remanded to the Assessing Officer for considering the claim of the assessee for claiming deduction of unaccounted expenditure under sec.37 (1) of the Act.
