Ajeet Kumar Seth vs Commissioner of Income Tax

This appeal is u/s 260A of the IT Act, 1961, at the instance of the assessee for the relevant year 1982-83.

An assessment order was passed against the present appellant by the assessing authority by making various additions including a sum of Rs. 76,300 as undisclosed income from undisclosed sources.

Being aggrieved by the assessment order, the appellant preferred an appeal before the CIT(A). During the pendency of the appeal, before its hearing, the appellant sought to add one ground in the memo of appeal challenging the addition of Rs. 76,300 in his hands.

It was submitted by the appellant that the aforesaid amount was added in the hands of his wife by the Department and such addition was confirmed by the Tribunal by the order dt. 9th Sept., 1988. The same amount was wrongly added in his income.

Faced with this situation, the assessee appellant filed an application before the CIT(A) for raising an additional ground challenging the addition of the aforesaid amount in his hands, on 19th Jan., 1990, when the appeal itself was posted for hearing. The appeal was dismissed without passing any express order on the said application of the appellant.

Thereafter the matter was carried by the appellant assessee to the Tribunal in second appeal. The Tribunal vide its order dt. 6th Sept., 1991, allowed the appeal of the assessee on a short point that the application filed by the appellant to raise the additional ground as ground No. 9 was neither rejected nor accepted. The Tribunal took the view as the learned CIT(A) has neither rejected the plea of raising additional ground nor given any finding on the same, it is proper to send the file back to the learned CIT(A) to decide whether raising of the additional ground was permissible in the eyes of law or not.

After remand order, the matter came up for hearing before the CIT(A). This time, the learned CIT(A) refused to permit the appellant to add the additional ground on the ground that the said plea is being raised with considerable delay. As such the appellant cannot now be permitted to raise the said plea by the order dt. 17th Aug., 1992. The said order on further appeal had been confirmed by the Tribunal.

While admitting the present appeal, the following question of law was framed by this Court:

Whether on the facts and in the circumstances of the case, the Tribunal is legally justified in confirming the order of the first appellate authority rejecting to entertain the additional ground relating to the addition of Rs. 76,300?

Heard Sri Pawan Agrawal learned Counsel for the appellant and Sri A.N. Mahajan learned standing counsel for the Department.

Section 250(5) of the IT Act deals with the procedure to be followed by the first appellate authority in appeal. Sub-section (5) provides that the appellate authority may allow the appellant to add ground in the appeal not specified in the grounds of the appeal, provided he is satisfied that the omission of the ground from the form of the appeal, was not wilful or unreasonable.

Learned Counsel for the appellant has laid emphasis on words ''wilful'' and ''unreasonable''. He submits that there is no finding that there was any ''wilful omission'' on the part of the appellant in not raising such ground in the memo of appeal earlier. He however submits that in view of the changed situation and the fact that the Tribunal has confirmed the addition of the aforesaid amount in the hands of the wife of the assessee by the order dt. 9th Sept., 1988, the requisite application was filed soon before the hearing of the appeal i.e. on 19th Jan., 1990. It cannot by any stretch of imagination be said as ''wilful'' or ''unreasonable''. In contra Sri A.N. Mahajan learned Counsel for the Department supports the order of the Tribunal.

We have given our careful consideration to the respective submissions made by the learned Counsel for the parties.

Sub-section (5) of Section 250 of the IT Act gives ample power to the first appellate authority to permit the appellant to raise additional ground during the course of hearing of the appeal. The only restriction is where there is ''wilful omission'' or ''unreasonable'' to permit the assessee to raise additional ground. The Sub-section (5) of Section 250 of the Act is quoted below:

(5) The CIT(A) may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if the CIT(A) is satisfied that the omission of that ground from the form of appeal was not wilful or unreasonable.

As noted above, the first appellate authority has not said a word in its order that it is ''wilful omission'' or ''unreasonable'' to allow the appellant to raise additional ground. However, only this much has been said by the appellate authority that there is considerable delay in raising plea sought to be raised. The appellate authority has not applied its mind as to whether there was any ''wilful default'' or ''unreasonableness'' on the part of the appellant in not raising such ground earlier.

There is change in the facts and circumstances and the addition was confirmed in the hands of the (wife of) assessee by the Tribunal by its order dt. 19th Jan., 1988, is a relevant circumstance to be taken into consideration before rejecting the application for permission to urge an additional ground.

We are of the opinion that the first appellate authority should have permitted the appellant to raise the additional ground whatever its worth may be on merits. The appellate authority has taken a very technical view of the matter.

The entire matter was before the first appellate authority and the first appellate authority by refusing to grant permission to raise additional ground has patently committed a mistake and the said approach of the first appellate authority is not justice oriented. In such matters the Hon''ble apex Court has held that the approach of the Court should be justice oriented. The Hon''ble apex Court has held that where substantial justice and technical consideration are pitted against each other, cause of substantial justice deserves to be preferred. The relevant part of the extract of the judgment of the Hon''ble apex Court rendered in the case of Collector, Land Acquisition, Anantnag and Another Vs. Mst. Katiji and Others, , is reproduced below:

It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. Making a justice oriented approach from this perspective, there was sufficient cause for condoning the delay in the institution of the appeal....

In the light of the above discussion, we find that the Tribunal''s order suffers with substantial error of law. We therefore hold that the Tribunal was not justified in confirming the order of the first appellate authority refusing to entertain the application for additional ground relating to the addition of Rs. 76,300.

The appeal is allowed. The orders of the first appellate authority as well as of the Tribunal are hereby set aside. The matter is remanded to the first appellate authority to hear and decide the matter on merits after taking into consideration the additional ground sought to be raised by the appellant. No costs.