K.N. Singh, J. - (1.) The appellant is a Government Corporation engaged in jute industry. It was assessed to income tax for the, assessment year 1974-75 by the Income-tax Officer. The assessee preferred appeal before the Appellate Assistant Commissioner. During the hearing of the appeal, the assessee raised an additional ground claiming deduction of Rs. 11,54,995/- on the ground of liability of Purchase-tax. The assessee claimed that in view of the decision of this Court in Kedarnath Jute Company Ltd. v. Commr. of Income-tax, 82 ITR 363 the aforesaid amount being tax liability. should be deducted from its income for purposes of charging tax. The Appellate Assistant Commissioner permitted the assessee to raise the additional ground and after hearing the Income-tax Officer, he accepted the assessee's claim and allowed deduction of Rs. 11,54,995/- in computing, the total income of the assessee for the assessment year 1974-75. The Revenue preferred appeal before the Income-tax Appellate Tribunal. The Tribunal held that the Appellate Assistant Commissioner had no jurisdiction to entertain an additional ground or to grant relief to the assessee on a ground which had not been raised before the Income-tax Officer. The Tribunal set aside the order of the Appellate Assistant Commissioner placing reliance on the decision of this Court in Addl. Commr. of Income-tax Gujarat v. Gurjargravures P. Ltd., (1 978) 111 ITR 1 . The assessee made application before the Tribunal under S. 256(1) of the Income-tax Act, 1961 for making reference to the High Court. The Tribunal refused to refer the question on the findings that the question stood covered by this Court's decision in Gurjargravures (supra)., The assessee thereupon approached the High Court under S. 256(2) of the Act for calling the statement of case and reference from the Appellate Tribunal. A Division Bench of the Calcutta High Court held that the Tribunal was right in rejecting the assessee's application, therefore, it refused to call statement of case. The assessee thereupon approached this Court under Art. 136 of the Constitution, and obtained leave. Hence this Appeal.
(2.) The question of law which the assessee sought to be referred to the High Court under S.256(1) of the Act was: "Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the Appellate Assistant Commissioner of Income-tax had exceeded his powers in entertaining the additional ground of appeal taken before him in respect of the claim for deduction of a sum of Rs. 1 1,54,995 / - representing liability for raw jute purchase-tax."
(3.) Section 251 of the Income-tax Act (hereinafter referred to as the Act) prescribes power of the Appellate Authority hearing appeal against the order of Income-tax Officer. Clause (a) of S. 251 (1) confers power on the Appellate Authority namely the Appellate Assistant Commissioner (now after the Amendment of 1987 the Deputy Commissioner (Appeals) according to which Appellate Authority while hearing appeal against an order of assessment has power to confirm, reduce, enhance or annul the assessment; he is further empowered to set aside the assessment and remit the case back to the Assessing Officer for making a fresh assessment in accordance with its directions, after making such further inquiry as may be necessary. If a direction is issued by the Appellate Authority, the Assessing Officer is required to proceed to make such fresh assessment and determine the amount of tax, if any, payable on the basis of fresh assessment. The Appellate Assistant Commissioner is thus invested with wide powers under S. 251 (1)(a) of the Act while hearing, an appeal against the order of assessment made by the Income-tax Officer. The amplitude of the power includes power to set aside the assessment order or modify the same. The question is whether the Appellate Assistant Commissioner while hearing an appeal under S. 251 (1)(a) has jurisdiction to allow the assessee to raise an additional ground in assailing the order of the assessment before it. The Act does not contain any express provision debarring an assessee from raising an additional ground in appeal and there is no provision in the Act placing restriction on the power of the Appellate Authority in entertaining an additional ground in appeal. In the absence of any statutory provision, general principle relating to the amplitude of appellate authority's power being coterminus with that of the initial authority should normally be applicable. But this question for the purposes of the Income tax, Act has been an intricate and vexed one,- There is no uniformity in the judicial opinion on this question.;