Tribunal discretion on additional legal grounds cannot be refused for lack of formal amendment where no prejudice is shown.

The Tribunal's discretion to permit an additional ground of appeal must be exercised judicially, especially where the ground raises only a question of law and no further fact-finding is needed. A formal amendment to the memorandum of appeal was not required before the ground could be entertained, and the rule allowing leave to urge an unmentioned ground did not support a contrary insistence. Because the department had notice of the proposed ground and no prejudice or lack of opportunity to respond was shown, refusal of leave on the basis of formal amendment was arbitrary. The answer was in favour of the assessee.

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Issues: Whether the Income-tax Appellate Tribunal properly exercised its discretion in refusing leave to urge an additional ground of appeal not included in the memorandum of appeal and not formally amended into it.

Analysis: The additional ground raised only a question of law and did not require further investigation of facts. The governing Tribunal rule permitted an appellant, with leave, to urge a ground not set forth in the memorandum of appeal. Nothing in that rule required the new ground to be incorporated by a formal amendment before it could be considered. The reference to verification or stamp was not supported by any provision in the Act or the rules. The Tribunal's insistence on a formal amendment was therefore not a valid ground for refusal. The circumstances also showed that the department had notice of the proposed ground and no prejudice or lack of opportunity to meet it was demonstrated. Discretion in such matters had to be exercised judicially, and on these facts refusal of leave was arbitrary.

Conclusion: The Tribunal did not properly exercise its discretion in refusing leave to urge the additional ground, and the answer was in favour of the assessee.

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