2023 (4) TMI 1247 - AT - Income Tax

Assessee's appeal allowed by ITAT for deduction of excess interest. CIT(A) can consider additional grounds.

The ITAT allowed the appeal of the assessee for statistical purposes, emphasizing that the CIT(A) should have considered the additional ground for ... Admission of additional ground before CIT(A) - powers of the appellate authorities including the Appellate Assistant Commissioner on entertaining an additional ground raise by assessee - additional ground of appeal on the new issue is not emanating from the assessment order and, therefore, it is dismissed by CIT(A) - HELD THAT:- The above understanding of the Ld.CIT(Appeals) is not correct. Any fresh claim by way of additional ground can be made by the assessee before the appellate authorities including the CIT(Appeals) and it is not only before the ITAT. We observed that the CIT(Appeals) misunderstood the decision of CIT vs. Jai Parabolic Springs Ltd. [2008 (4) TMI 3 - DELHI HIGH COURT] as in this case the assessee had raised an additional ground before the Tribunal even though there was no claim made in the return of income. The Tribunal considering the decision of the Supreme Court in the case of Goetze (India) Ltd. [2006 (3) TMI 75 - SUPREME COURT] admitted the additional grounds of appeal raised by the assessee. CIT(Appeals) over looked the decision of Jute Corporation of India Ltd. [1990 (9) TMI 6 - SUPREME COURT] which was referred to by the Hon’ble Delhi High Court in the very same judgment on the powers of the appellate authorities including the Appellate Assistant Commissioner on entertaining an additional ground raised by the assessee, wherein it has been held that the Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. Therefore, we hold that the CIT(A) has all the powers to entertain the additional ground raised before him. Observation of the Ld.CIT(A) that the powers to entertain additional claim not made in the return of income is discretion of ITAT and not CIT(Appeals) is misplaced. In the additional ground Assessee contended by the assessee that it is entitled for deduction of Rs.105.94 crores out of its business income on account of excess interest credited in the books of account and offered for tax is no now irrecoverable. These contentions of the assessee have to be examined by the Assessing Officer as the said claim was not made before the AO nor considered by the CIT(Appeals) which was raised before him as on additional ground of appeal - Decided in favour of assessee for statistical purpose. Issues involved:The issues involved in the judgment are related to the additional ground of appeal raised by the assessee for deduction of excess interest credited in the books of account, the jurisdiction of the CIT(A) to entertain such claims, and the discretion of the ITAT in admitting additional grounds.Additional Ground of Appeal for Deduction:The assessee raised an additional ground of appeal seeking a deduction of Rs. 105.94 crores on account of excess interest credited in the books of account, following a judgment of the Supreme Court. The CIT(A) initially omitted to consider this ground, leading the assessee to file an application under section 154 of the Act. The CIT(A) later dismissed the additional ground, stating it did not emanate from the assessment order. The ITAT disagreed with this reasoning, emphasizing that the CIT(A) has the power to entertain additional grounds raised before them. The ITAT referred to relevant case law to support its decision and concluded that the CIT(A) should have considered the additional ground for deduction.Jurisdiction of CIT(A) and Discretion of ITAT:The CIT(A) dismissed the additional ground of appeal based on the belief that the power to entertain claims not made in the return of income lies with the ITAT and not with the CIT(A). However, the ITAT disagreed with this interpretation, citing a decision of the Delhi High Court and a Supreme Court ruling. The ITAT clarified that the CIT(A) has the authority to consider fresh claims by way of additional grounds, and the discretion to allow or disallow such claims should be exercised in accordance with the law and reason. The ITAT held that the CIT(A) should have examined the contentions of the assessee regarding the deduction and remanded the issue back to the Assessing Officer for fresh adjudication.Conclusion:The ITAT allowed the appeal of the assessee for statistical purposes, highlighting that the additional ground for deduction should have been considered by the CIT(A) and that the Assessing Officer needs to re-examine the issue in accordance with the law. The judgment emphasized the CIT(A)'s authority to entertain additional grounds raised before them and clarified the misconception regarding the discretion of the ITAT in admitting such grounds.