Fresh tax claims and depreciation relief require evidentiary verification and fair rebuttal before appellate allowance.

Appellate authorities can entertain a fresh tax claim even though the assessing authority is constrained by Goetze, but any such claim must be supported by evidence and tested after the other side has a fair opportunity to respond. Here, the claim that advances written back were not taxable was allowed without examining the underlying material, so the matter required fresh adjudication. Depreciation could also not be allowed without verifying the past assessment records, because the tax treatment of the asset cost depended on those records. That issue too was remitted for reconsideration on the relevant factual record.

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Issues: (i) Whether the appellate authority was justified in entertaining and allowing the assessee's fresh claim that Rs. 2 crores represented advances written back and not taxable income. (ii) Whether the appellate authority was justified in allowing depreciation without verification of the past assessment records.

Issue (i): Whether the appellate authority was justified in entertaining and allowing the assessee's fresh claim that Rs. 2 crores represented advances written back and not taxable income.

Analysis: The restriction recognised in Goetze applies to the assessing authority and does not curtail the powers of appellate authorities to consider a new claim. A fresh claim can be examined in appeal, but the claim must be supported by evidence and the opposite party must have an opportunity to meet it. In the present matter, the appellate authority accepted the claim without examining the underlying material and without proper rebuttal by the assessing authority.

Conclusion: The allowance of the fresh claim could not be sustained on the existing record and the issue required fresh adjudication.

Issue (ii): Whether the appellate authority was justified in allowing depreciation without verification of the past assessment records.

Analysis: The allowance of depreciation depended on factual verification of earlier years' assessment records to determine whether the asset cost had already received tax treatment as application of income. The appellate authority did not record any verification of the past records, and the finding was thus not based on a complete factual inquiry.

Conclusion: The depreciation issue also required reconsideration on the basis of the relevant past assessment records.

Final Conclusion: Both disputed issues were sent back for fresh decision in accordance with law, and the Revenue obtained only a partial success at the appellate stage.

Ratio Decidendi: While appellate authorities may entertain a fresh tax claim, such relief can be granted only after proper factual examination and fair opportunity to the other side; factual allowances like depreciation must rest on verification of the relevant assessment record.

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