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 deduction of excess interest credited in the books of account. The ITAT clarified that the CIT(A) has the authority to entertain additional grounds and remanded the issue back to the Assessing Officer for fresh adjudication in accordance with the law.

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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.

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