HIGH COURT OF ALLAHABAD

Ajeet Kumar Seth

v.

Commissioner of Income-tax

PRAKASH KRISHNA AND BHARATI SAPRU, JJ.

IT APPEAL NO. 175 OF 2000

September 18, 2007

Section 250 of Income-tax Act, 1961 - Commissioner (Appeals) - Procedure of - Assessment year 1982-83 - Assessing authority made various additions including a sum as undisclosed income in hands of assessee - Assessee challenged said order before Commissioner (Appeals) - During pendency of appeal assessee filed an application for raising an additional ground stating that same amount had been added in hands of his wife - Commissioner (Appeals) rejected said application and Tribunal upheld that order - Whether since there was change in facts and circumstances and addition being confirmed in hands of assessee’s wife was a relevant circumstance to be taken into consideration before rejecting application for permission to urge an additional ground, Commissioner (Appeals) by refusing to grant permission to raise additional ground had committed a mistake and said approache was not justice oriented - Held, yes - Whether therefore, Tribunal’s order confirming such rejection suffered with substantial error of law - Held, yes

FACTS

The assessing authority made various additions to the income of the assessee including the addition of Rs. 76,300 as undisclosed income from undisclosed sources. The assessee filed appeal before the Commissioner (Appeals). During the pendency of the appeal, the assessee sought to add one ground in the memo of the appeal challenging the addition, of Rs. 76,300 submitting that the impugned amount was added in the hands of his wife by the department and such addition was confirmed by the Tribunal and the same amount was wrongly added in his income. The Commissioner (Appeals) refused to permit the assessee to add the additional ground on the ground that the said plea was being raised with considerable delay. The Tribunal upheld the order of the Commissioner (Appeals).

On appeal under section 260A:

HELD

Section 250(5) 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 ‘unreasonableness’ to permit the assessee to raise additional ground. [Para 13]

The first appellate authority had not said a word in its order that it was ‘wilful omission’ or ‘unreasonableness’ to allow the assessee to raise additional ground. However, only that much had been said by the appellate authority that there was considerable delay in raising plea sought to be raised. The appellate authority had not applied its mind as to whether there was any ‘wilful default’ or ‘unreasonableness’ on the part of the assessee in not raising such ground earlier. [Para 14]

There was change in the facts and circumstances and the addition being was confirmed in the hands of the wife of the assessee by the Tribunal by its order dated 19-1-1988 was a relevant circumstance to be taken into consideration before rejecting the application for permission to urge an additional ground. [Para 15]

The first appellate authority should have permitted the assessee to, raise the additional ground whatever its worth might be on merits. The appellate authority had taken a very technical view of the matter. [Para 16]

The entire matter was before the first appellate authority and the first appellate- authority by refusing to grant permission to raise additional ground had patently committed a mistake and the said approach of the first appellate authority was not justice oriented. [Para 17]

Thus, the Tribunal’s order suffered with substantial error of law. Therefore, 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 the impugned amount. [Para 18]

The appeal was to be allowed. The orders of the first appellate authority as well as of the Tribunal were to be set aside. The matter was to be 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 assessee. [Para 19]