Discretion to admit fresh grounds in appeal denied where factual inquiry and delay undermine application; refusal upheld.

Whether the ITAT exercised its appellate discretion under rule 12 and section 66(2) to admit an additional ground turned on whether the new plea was a pure question of law or required factual inquiry. The Court noted that issues such as source of cash credit, maintenance of accounts and prior option would necessitate factual investigation; the ground had not been raised earlier, no adequate explanation for delay was offered, and bona fides were doubtful. Because the Tribunal gave reasons logically connected to these considerations, its refusal to admit the ground was judicially exercised and is upheld.

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Issues: (i) Whether the Income-tax Appellate Tribunal exercised its discretion judicially in refusing to entertain the assessee's additional ground of appeal under rule 12 and section 66(2) of the Income-tax Act.

Analysis: The Tribunal's power to permit an appellant to urge a ground not taken in the memorandum of appeal is discretionary under rule 12 and section 66(2). The Court examined whether the new ground was a pure question of law or required investigation of facts such as the source of the cash credit, maintenance of accounts for that source, and whether an option had been exercised for a different previous year. These matters involve factual inquiries and the Tribunal legitimately considered (a) that the ground had not been taken before income-tax authorities, (b) that no sufficient explanation was offered for the delay, (c) that the plea might not be purely legal because factual investigation would be necessary, and (d) the bona fides of the application, including the possibility that it was sought to delay proceedings. The Tribunal's refusal was based on reasons having a logical connection with the exercise of its discretion and was not arbitrary.

Conclusion: The Tribunal exercised its discretion judicially in refusing to entertain the additional ground of appeal; the refusal is upheld (against the assessee).

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