Commissioner of Income Tax vs C. Sekharan

T.L. Viswanatha Iyer, J.—The Income Tax Appellate Tribunal, Cochin Bench, has referred the following question for determination of this court u/s 256(2) of the Income Tax Act, 1961, namely :

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in admitting the ground raised by the assessee and restoring the matter to the Income Tax Officer for proper disposal in accordance with law ?"

The assessee had omitted to make a claim for weighted deduction u/s 35B before the assessing authority but raised the contention when the matter was pending in appeal before the Commissioner of Income Tax (Appeals). The Commissioner, however, refused to entertain the claim as he felt that the decision in The Additional Commissioner of Income Tax, Gujarat Vs. Gurjargravures Private Ltd., stood in the way of his entertaining the plea. The Tribunal, however, took a different view and came to the conclusion that this point is liable to be dealt with. Accordingly, it directed the Income Tax Officer to go into the question and decide whether the assessee was entitled to the relief u/s 35B. It is based on this decision of the Tribunal that the aforesaid question of law was directed to be referred in the petition u/s 256(2).

Though the question is one of law, it is unnecessary to deal with the matter in detail for the reason that the applicability of the decision in The Additional Commissioner of Income Tax, Gujarat Vs. Gurjargravures Private Ltd., was the subject of consideration by the Supreme Court in Jute of Corporation of India Ltd. Vs. Commissioner of Income Tax and another, . The Supreme Court noted that the aforesaid decision had been rendered without taking note of the earlier three Bench decision in Commissioner of Income Tax, U.P.,Lucknow Vs. Kanpur Coal Syndicate, . They also held that the decision in The Additional Commissioner of Income Tax, Gujarat Vs. Gurjargravures Private Ltd., was one rendered on the peculiar facts and circumstances of the case and was not one of the general application. Accordingly, they held that the appellate authority could entertain the additional ground of appeal and that the entertainability or otherwise of the question will depend upon the facts and circumstances of each case. The Supreme Court said that no rigid principles or any hard and fast rule can be laid down for the purpose. Eventually the question was one of the Appellate Assistant Commissioner being satisfied of the appellant''s bona fides. In doing so, the Supreme Court relied on the decision of the Calcutta High Court in Rai Kumar Srimal Vs. Commissioner of Income Tax, , where the Bench presided over by Sabyasachi Mukharji J., said that the Appellate Assistant Commissioner was entitled to admit new grounds or evidence either suo motu or at the invitation of the parties. If he was acting on the invitation by the assessee, there must be some ground for admitting new evidence in the sense that there must be some explanation to show that the failure to adduce evidence earlier was not wilful and not unreasonable. This view enunciated by Sabyasachi Mukharji J., in the judgment of the Calcutta High Court found favour with the Supreme Court.

There is no dispute about the bona fides of the assessee so far as this case is concerned. The Tribunal has found that this is eminently a fit case where the assessee should be permitted to raise additional points in the appeal. Nothing has been made out before us to show that the assessee acted unreasonably or that he was in default. The Tribunal has, therefore, acted perfectly and legally in permitting the assessee to raise additional points about Section 35B in the appeal and directing the Income Tax Officer to deal with the matter on its merits. We do not, therefore, find any merit in the contentions raised by the Revenue, which according to us, stand concluded by the decision of the Supreme Court aforesaid.

We, therefore, answer the question referred to us in the affirmative, that is, in favour of the assessee and against the Revenue. No costs.

Communicate a copy of this judgment under the seal of this court and the signature of the Registrar to the Income Tax Appellate Tribunal, Cochin Bench, for information.