1980 (9) TMI 74 - HC - Income Tax

Tribunal upholds rule against introducing new contentions in second appeal; assessee prevails

Commissioner Of Income-Tax, Delhi I Versus Anand Prasad And Others (L. Rs. Of RS. Banarsi Dass)

Commissioner Of Income-Tax, Delhi I Versus Anand Prasad And Others (L. Rs. Of RS. Banarsi Dass) - [1981] 128 ITR 388, 5 TAXMANN 308 Issues Involved:1. Whether the Tribunal was justified in refusing to entertain the department's contention that the profits from the sale of plots are assessable under the head 'Capital gains'.2. Whether a new point can be raised at the second appellate stage which was not raised before the Appellate Assistant Commissioner (AAC).Summary:Issue 1: Justification of Tribunal's Refusal to Entertain Department's ContentionThe Tribunal refused to entertain the department's contention that the profits from the sale of plots should be assessed under the head 'Capital gains' because this contention was not raised before the AAC. The Tribunal noted that the Income-tax Officer (ITO) should have expected the AAC to follow the Tribunal's previous order, which had already been received, and should have urged the consideration of the alternative contention at that stage. The Tribunal concluded that the department cannot be permitted to raise this contention at the second appellate stage.Issue 2: Raising New Points at the Second Appellate StageThe court held that a new point cannot be raised at the second appellate stage if it was not taken before the AAC. The court emphasized that the nature of an appeal is to bring to light errors or defects in the decision under appeal, and a new point that was not urged before the AAC cannot be considered an error or defect in the AAC's order. The court cited several precedents, including CIT v. Karamchand Premchand P. Ltd. [1969] 74 ITR 254 and Addl. CIT v. Gurjargravures P. Ltd. [1978] 111 ITR 1 (SC), to support this view. The court also referred to CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR 891, which held that the AAC cannot enhance the assessment by discovering new sources of income not mentioned in the return or considered by the ITO.Conclusion:The court concluded that the Tribunal was right in not allowing a new point to be raised in the circumstances of the case. The question referred to the court was answered in the affirmative, in favor of the assessee and against the department. The assessee was awarded costs, with counsel's fee set at Rs. 500.