INCOME TAX ACT, 1961

section 250 Rule 46A

Appeal [CIT(A)] - Additional ground - Admissibility -

Return was filed by the assessee declaring a total income of 'Nil'. The AO, vide its Order dated 12-12-2011 made under section 143(3) assessed the total income of the assessee at Rs. 70,80,040 and imposed tax liability of Rs. 27,62,035. Assessee on 21-1-2012 filed an application for rectification under section 154 in respect of the aforesaid Order, dated 12-12-2011 by pointing out that an amount of Rs. 52,14,543 of short term capital gain on the sale of debts funds was inadvertently considered as business income in the assessee's return instead of short-term capital gain. As against the Order dated 29-3-2012, the assessee on 26/4/2012 preferred an appeal to the CIT(A). The assessee, also instituted an appeal against the Order dated 12-12-2011 made under section 143(3) by the AO. Both the appeals were taken up for consideration by the CIT(A) and disposed of by a common Order dated 26-9-2013. The CIT(A) dismissed the assessee's appeal against Order dated 29-3-2012 in relation to the provisions of section 154. However, the CIT(A) allowed the assessee's appeal against Order dated 12-12-2011 made under section 143(3). Tribunal by the impugned judgment and Order dated 11/4/2014 setaside the common order dated 26-09-2013 made by CIT(A). The question which therefore arises in this matter is whether the CIT(A) had the jurisdiction to entertain this additional grounds in the appeal instituted by the assessee questioning the AO's order dated 12-12-2011 made under section 143 (3) even though such grounds neither flow from any change of circumstances or the law nor is it that such grounds were unavailable to the appellant/assessee at the stage of filing the return or during the progress of the assessment proceedings before the AO.The CIT(A) had held that it had such jurisdiction. In exercise of such jurisdiction, the CIT(A) not only permitted the appellants to raised these additional grounds but also allowed the appeal by accepting such additional grounds.Held: After declaring that the CIT(A) had the jurisdiction to entertain the additional grounds raised by the appellant, the matter will have to be remanded to the CIT(A) for determining whether in the facts and circumstances of the present case, discretion was required to be exercised in favour of the appellant/assessee and further, whether on merits the appellant/assessee was entitled to the benefits as claimed by raising the aforesaid additional grounds. The CIT(A) has the jurisdiction to entertain the two additional grounds/claims raised by the appellant before it. However, Court also held that in the exercise of such jurisdiction, the CIT(A) has not properly dealt with the said additional grounds/claims on their merits. Hence, the necessity of remand to CIT(A) to deal with the said two additional grounds/claims on merits.

Relied:CIT v. Pruthvi Brokers & Shareholders (P) Ltd. 92012) 349 ITR 336 (Bom) : 2012 TaxPub(DT) 2671 (Bom-HC), Goetze (India) Ltd. v. CIT [2006] 284 ITR 323 (SC) : 2006 TaxPub(DT) 1528 (SC), Addl. CIT, Gujarat v. Gurjargravures P. Ltd, 1978 111 ITR 1 (SC) : 1978 TaxPub(DT) 688 (SC), Jute Corporation of India Ltd. v. CIT & Anr, (1991) 187 ITR 688 (SC) : 1991 TaxPub(DT) 505 (SC), CIT, U.P. v. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC) : 1964 TaxPub(DT) 0339 (SC).

REFERRED : Ahmedabad Electricity Co. Ltd v. CIT (193) 199 ITR 351 (Bom) : 1993 TaxPub(DT) 0430 (Bom-HC).

FAVOUR : Matter remanded.

A.Y. : 2009-10

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