INCOME TAX ACT APPELLATE TRIBUNAL, 1963

Rule 27

Appeal (Tribunal) - - -

By way of appeal before CIT(A) assessee challenged validity of assessment framed under section 153(3) on the ground of non-recording of satisfaction. CIT(A) rejected this plea and inter alia held that there was no need for recording satisfaction, however, on merits, CIT(A) allowed appeal in favour of assessee and deleted all additions/disallownaces made by the AO. Revenue contested order passed by CIT(A) by filing appeal under section 253(2) before ITAT, contending that CIT(A) had erred in deleting additions. In said proceedings, assessee made oral application under rule 27 of ITAT Rules and urged additional grounds against findings of CIT(A) pertaining to the issue of recording of satisfaction note, and necessary condition of existence of nexus between assessment and incriminating material by contending that these findings were in the teeth of law as settled by various courts in respect of said issues. ITAT disagreed with assessee. As per ITAT, assessee not having filed a cross-objection, even when appeal was preferred by revenue, inference could be drawn that assessee had accepted findings in part of final order, that was decided against him. Accordingly, ITAT on a technical ground refused to consider legal issues that were premised on rule 27 and at the same time, on merit, ITAT overturned decision of CIT(A) and allowed appeal in favour of Revenue and restored issues to AO for deciding afresh with further direction to assessee to produce all necessary documentary evidence in support of its claim. Assessee challenged this by way of appeal before High Court.Held: Rule 27 of ITAT Rules, 1963 embodies a fundamental principal that a respondent who may not have been aggrieved by final order of Lower Authority or the Court, and, therefore, not filed appeal agianst the same, is entiteld to defend such an order before appellate forum on all grounds, including the ground which has been held against him by Lower Authority, though final order is in its favour. In the instant case, assessee was not an aggreived party, as he had succeeded before CIT(A) in the ultimate analysis. However, assessee not having filed a cross objection, even when appeal was preferred by revenue, it does not mean that an inference can be drawn that the Respondent-assessee had accepted findings in part of final order, that was decided against him. Therefore, when revenue filed an appeal before ITAT, assessee was entitled under law to defend the same and support the order in appeal on any of the grounds decided agianst it. Assessee had taken the ground of maintainability before CIT(A) and, therefore, in the appeal field by revenue, he could rely upon rule 27 and advance his arguments, even though he had not file cross-objections against the findings which were against him. ITAT, therefore, committed a mistake by not permitting assessee to support final order of CIT(A)by assailing the findings of CIT(A) on the issues that had been decided agianst him. Assessee, as a respondent before ITAT was entitled to agitate jurisdictional issue relating to the validity of reassessment proceeidngs. Therefore, impugned order passed by ITAT suffered from perversity in so far as it refused to allow assessee (respondent before Tribunal) to urge the grounds by way of an oral application under rule 27.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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