Commissioner of Income Tax vs George Williamson (Assam) Ltd. (No. 2)

D.N. Baruah, J.—The following question has been referred u/s 256(2) of the Income Tax Act, 1961 (for short "the Act"), as per the direction of this court in Civil Rule No. 2(M) of 1994 for the opinion of this court :

"Whether under the facts and circumstances of the case, the Tribunal was justified in directing the Commissioner of Income Tax (Appeals) to admit the assessee''s ground relating to weighted deduction u/s 35(1)(ii)/35(2A) taken before him and dispose of the matter on merits when the same was not raised before the Assessing Officer ?"

The facts for the purpose of answering this question are :

In connection with the assessment year 1982-83, the assessee-company did not make any claim for deduction u/s 35(1)(ii)/35(2A) of the Act. Therefore, the Assessing Officer did not pass any order on this point. The assessee wanted to raise this ground as an additional ground before the Commissioner of Income Tax (Appeals), however, the Commissioner of Income Tax (Appeals) rejected the appeal along with other grounds. Being aggrieved, the assessee preferred an appeal before the Income Tax Appellate Tribunal. The Tribunal, after hearing the parties, allowed the appeal and directed the Commissioner of Income Tax (Appeals) to entertain the additional ground raised by the assessee. The Revenue being dissatisfied requested the Tribunal to refer the above question, which was however refused by the Tribunal. The Revenue thereafter preferred the above civil rule, viz., C. R. No. 2(M) of 1994, and this court directed the Tribunal to refer the question stated above. Hence, the present reference.

We have heard Mr. G.K. Joshi, learned standing counsel for the Department assisted by Mr. U. Bhuyan, and Mr. R. Gogoi, learned counsel for the assessee assisted by Mr. H. Roy.

Mr. Joshi submits that the Tribunal erred in law in allowing the additional ground, which was not raised before the Assessing Officer. Mr. Gogoi, on the other hand, submits that the Tribunal as well as the Commissioner of Income Tax (Appeals) have ample power to allow the additional ground. In the instant case, the Tribunal was satisfied that the additional ground raised by the assessee was necessary for proper adjudication of the matter. Therefore, the Commissioner of Income Tax (Appeals) was directed to entertain the additional ground raised by the assessee.

Either the Commissioner of Income Tax (Appeals) or the Tribunal should be concerned about the dispensation of justice and merely because a ground was not taken in the memo of appeal the parties should not suffer. Denial to take up an additional ground, if it is necessary for proper adjudication of the matter, will amount to denial of justice. Besides, Section 254 of the Act empowers the Tribunal to pass an order after giving both the parties to the appeal an opportunity of being heard as it thinks fit. In the instant case, the Tribunal thought it fit that the additional ground, which was raised before the Commissioner of Income Tax (Appeals) and the Tribunal, has got some relevance in adjudicating the matter in dispute. Therefore, in our opinion, the Tribunal passed the order in conformity with the provisions of law. Accordingly, we answer the question in the affirmative, i.e., in favour of the assessee and against the Revenue.

A copy of this judgment under the signature of the Registrar and the seal of the High Court shall be transmitted to the Income Tax Appellate Tribunal.

In the facts and circumstances of the case, we make no order as to costs.