2012 (1) TMI 231 - AT - Income Tax

Tribunal admits Additional Ground challenging assessment without notice. Appeals allowed for statistical purposes.

Devendranath G. Chaturvedi Versus Assistant Commissioner of Income Tax, Central Cir. 1 (2), Ahmedabad

Devendranath G. Chaturvedi Versus Assistant Commissioner of Income Tax, Central Cir. 1 (2), Ahmedabad - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether an Additional Ground alleging completion of block assessment without issuance of notice under section 143(2) is admissible at the appellate stage. 2. Whether the appellate authority (Tribunal) should admit an additional ground that raises a legal question founded on facts said to be 'on record' when the opposing party contends those facts require verification. 3. When an additional ground raising a jurisdictional/legal defect in the assessment procedure is admitted, whether the matter should be remitted to the first appellate authority for fresh consideration with opportunity of hearing. ISSUE-WISE DETAILED ANALYSIS Issue 1: Admissibility of Additional Ground alleging omission to issue notice under section 143(2) Legal framework: The Tribunal has discretion to allow or disallow new grounds of appeal; it may permit questions of law arising from facts on the record to be raised at the appellate stage where necessary to correctly assess tax liability. Precedent Treatment: The decision follows and applies the principles stated by the Apex Court in the cited authority regarding the Tribunal's discretion to admit additional grounds which raise questions of law based on facts that are on record. Interpretation and reasoning: The Court emphasized that the controlling consideration is whether the question raised is a question of law arising from facts that are part of the assessment record. The mere non-mention of a fact in the assessing officer's order or the appellate order does not mean the fact is absent from the assessment record. The specific fact here-whether notice under section 143(2) was issued in the block assessment-is a factual matter that is recorded in assessment proceedings and therefore may support a legal question at the appellate stage. Ratio vs. Obiter: Ratio - the Tribunal may admit an additional ground challenging procedural jurisdiction (non-issuance of notice under section 143(2)) where that ground raises a question of law arising from facts on the record of assessment proceedings. Conclusions: The Additional Ground alleging non-issuance of notice under section 143(2) is admissible and properly raised as a legal ground going to the root of the assessment. Issue 2: Whether facts supporting the additional ground can be subject to verification despite precedent requiring facts to be 'on record' Legal framework: Admission of a legal point requires that the underlying facts be on the assessment record; however, presence on the record does not preclude verification of those facts by the appellate authority. Precedent Treatment: The Court construed the Apex Court's statement to mean that facts must be part of the assessment record, but it did not interpret that statement as barring subsequent verification of those facts. Interpretation and reasoning: The Bench rejected the contention that because the opposing side claims facts require verification, the additional ground must be rejected. The Court held that the law requires the facts underpinning the legal question to exist in the record of assessment proceedings, but those facts may still be examined and verified during appellate consideration. Thus, the possibility that the Revenue may need to verify facts does not by itself render the ground inadmissible. Ratio vs. Obiter: Ratio - admissibility depends on facts being on the assessment record, not on the inability to verify those facts at the appellate stage; verification is permissible and does not defeat admission. Conclusions: The Tribunal may admit an additional legal ground even if the opposing party asserts that supporting facts need verification, provided the facts are part of the assessment record; such verification is a permissible part of appellate process. Issue 3: Appropriate remedy and procedural direction upon admitting the additional ground Legal framework: Principles of natural justice require that parties be afforded reasonable opportunity to address newly admitted grounds; where the appellate authority has not previously considered the issue, remand for fresh consideration is appropriate. Precedent Treatment: The Court applied general appellate fairness principles consistent with the approach in the cited Apex Court authority, directing further adjudication rather than disposing the matter outright on the admitted ground. Interpretation and reasoning: Having admitted the additional ground and noting the Revenue had no prior opportunity to examine the issue in detail, the Tribunal concluded that fairness required remand to the first appellate authority to record relevant facts and decide the question in accordance with law after granting both sides reasonable opportunity of hearing. Ratio vs. Obiter: Ratio - where an additional ground raising a legal/procedural defect is admitted and the issue has not been previously examined by the Revenue or the appellate authority, the appropriate course is to remit the matter for fresh consideration with an opportunity of hearing. Conclusions: The matter is remitted to the first appellate authority to record the relevant facts regarding the non-issuance of notice under section 143(2) (if any) and to decide the Additional Ground in accordance with law after providing reasonable opportunity of hearing to both parties. Disposition and Scope of Decision The Court admitted the Additional Ground challenging the block assessment for alleged non-issuance of notice under section 143(2), held that facts underpinning the legal question may be verified though they must be on the assessment record, and remitted the issue to the first appellate authority for factual recording and decision after hearing both sides. The decision is expressly limited to the question of admission and remit; no opinion is expressed on the original grounds in the cross appeals. Both appeals are disposed of for statistical purposes.