Finality of issues and cross-objection limits govern reassessment challenges to section 115JA and interest liability.

Only issues that had attained finality against the assessee were barred from challenge in reassessment; because the section 115JA computation and the consequential interest under sections 234B and 234C were still alive in the earlier appellate proceedings, they could be contested again. A non-appealing respondent cannot, without an appeal or cross-objection, seek a new ground that worsens the appellant's position; the Tribunal therefore could not raise or permit the Revenue to raise such an adverse ground in the assessee's appeal. The appeal was to be reheard on merits.

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Issues: (i) Whether the assessee could, in reassessment proceedings, challenge the applicability of section 115JA and the levy of interest under sections 234B and 234C when those matters had not attained finality in the original appellate proceedings. (ii) Whether the Tribunal could itself raise, or permit the Revenue to raise without an appeal or cross-objection, a ground that would operate adversely to the assessee.

Issue (i): Whether the assessee could, in reassessment proceedings, challenge the applicability of section 115JA and the levy of interest under sections 234B and 234C when those matters had not attained finality in the original appellate proceedings.

Analysis: The rule in Sun Engineering Works applies only to items that stood finally concluded against the assessee in the original assessment. Here, the assessment under section 115JA and the consequential interest issues had already been carried in appeal and were still alive before the Tribunal when reassessment proceedings were initiated. Since the issues had not reached finality, they were not barred from consideration in the reassessment appeal.

Conclusion: The assessee was entitled to contest the section 115JA assessment and the levy of interest under sections 234B and 234C.

Issue (ii): Whether the Tribunal could itself raise, or permit the Revenue to raise without an appeal or cross-objection, a ground that would operate adversely to the assessee.

Analysis: The settled appellate principle is that a respondent who has not appealed or filed a cross-objection may support the existing order, but cannot seek a new ground that worsens the appellant's position. The Tribunal's power to consider grounds in an appeal does not authorise it to create a new adverse issue for the appellant in favour of a non-appealing respondent. The Revenue having filed neither appeal nor cross-objection, it could not be allowed to raise such a ground.

Conclusion: The Tribunal had no jurisdiction to raise, or to permit the Revenue to raise, an adverse ground in the assessee's appeal.

Final Conclusion: Both preliminary issues were decided for the assessee, and the appeal was left to be refixed and heard on merits.

Ratio Decidendi: Only issues that have attained finality against the assessee can be excluded from reassessment challenge, and a non-appealing respondent cannot obtain relief adverse to the appellant in the absence of a cross-appeal or cross-objection.

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