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2018 Supreme(Bom) 352
IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT NAGPUR
B.P. DHARMADHIKARI, ARUN D. UPADHYE, JJ.
The Pr. Commissioner of Income Tax – Appellant
Versus
Karim Kamruddin Malik – Respondent
Income Tax Appeal No. 121 of 2017
Decided on : 26-03-2018
For the Appellant :Anand Parchure, Bhushan Mohta, Advocates.
For the Respondent:A.S. Jaiswal, Learned Senior Advocate with Radhika Bajaj, Advocate.
The court emphasized the importance of raising contentions at the first available opportunity and the impact of failure to do so in the context of the jurisdiction of the ITAT to entertain a ground raised orally for the first time.
Headnote:
Income Tax - Jurisdiction of ITAT to entertain ground raised orally - Section 271(1)(c) of the Income Tax Act, 1961 - Summary: The court considered the jurisdiction of the ITAT to examine a ground raised orally for the first time and the impact of failure to raise such a contention at the first available opportunity. The court quashed and set aside the order and restored the appeal back to the ITAT for fresh consideration in accordance with law, granting liberty to the respondent to raise contentions on the legality of the notice under Section 271(1)(c) of the Income Tax Act by adding appropriate ground and granting liberty to the department to raise an appropriate challenge thereto.
Fact of the Case:
The court considered the propriety and power of the ITAT to examine a ground raised orally for the first time and the impact of failure to raise such a contention at the first available opportunity.
Finding of the Court:
The court quashed and set aside the order and restored the appeal back to the ITAT for fresh consideration in accordance with law, granting liberty to the respondent to raise contentions on the legality of the notice under Section 271(1)(c) of the Income Tax Act by adding appropriate ground and granting liberty to the department to raise an appropriate challenge thereto.
Issues: The jurisdiction of the ITAT to entertain a ground raised orally for the first time and the impact of failure to raise such a contention at the first available opportunity.
Ratio Decidendi: The court held that the ITAT had not looked into the effect of omission to raise such a contention at the first available opportunity and accordingly quashed and set aside the order, restoring the appeal back to the ITAT for fresh consideration in accordance with law.
Final Decision: The Income Tax Appeal was allowed and disposed of by quashing and setting aside the order and restoring the appeal back to the ITAT for fresh consideration in accordance with law, granting liberty to the respondent to raise contentions on the legality of the notice under Section 271(1)(c) of the Income Tax Act by adding appropriate ground and granting liberty to the department to raise an appropriate challenge thereto.
(B.P. Dharmadhikari, J.)
1. Heard Shri Parchure with Shri Mohta, learned counsel for the appellant and Shri Jaiswal, learned Senior Advocate with Mrs. Bajaj, learned counsel for the respondent.
2. The present Appeal has been admitted on 10.01.2018 and was directed to be placed for hearing on 28.02.2018. The question formulated by this Court then reads :
“Whether on the facts and in the circumstances of the case and in law, Hon'ble ITAT was justified to entertain a ground by an oral submission without there being any specific ground raised before it and without any defence, submission and pleadings made by the assessee at the first instance before assessing officer, or before the CIT(A) with regard to his contention of defective show cause notice issued by the assessing officer for penalty under Section 271(1)(c) of the Income Tax Act, 1961.” On that day, hearing came to be adjourned to today. Today, Shri Jaiswal, learned Senior Advocate appearing for the assessee has sought adjournment to verify the position emerging after the judgment of the Income Tax Appellate Tribunal (I.T.A.T.) Bombay, in the case of Meherajee Cassinath Holdings Pvt. Ltd. vs. Assistant Commissioner of Income Tax, reported at (2017) 49 CCH 247 and judgment delivered by Pune Tribunal, in the case of Kanhaiyalal D. Jain vs. Assistant Commissioner of Income Tax, reported at (2016) 48 CCH 469. His submission is, these judgments have looked into the Division Bench judgment of this Court in the case of CIT vs. Smt. Kaushalya & Ors. reported at 216 (1995) ITR 660 (Bom.) and said judgment adopted the view expressed earlier in the case of CIT & Anr. vs. Manjunath a Cotton and Ginning Factory, reported at (2013) 359 ITR 565 (Karnataka) and in the case of CIT vs. Shri Samson Perinchery, (2017) 392 ITR 4 (Bom.). Appellants most probably acquiesced in it and hence the present challenge itself is unsustainable.
3. Shri Parchure, learned counsel, however, has pointed out very limited question of law on which appeal has been admitted. He submits that if this question is answered in favour of the revenue, larger exercise attempted by Shri Jaiswal, learned Senior Advocate, will not be open at all. He further adds that in any case the authorities ought to have looked into and recorded a finding of prejudice and thereafter only proceeded to look into the law on the point. He is relying upon Rule 27 and submits that I.T.A.T. is taking recourse to said Rule to permit the respondents before it to support the order appealed against, though he may not have challenged the adverse findings recorded therein. According to him, without giving revenue, which was not appellant before the I.T.A.T., necessary opportunity in this respect, such a course of action is not available.
4. Shri Jaiswal, learned Senior Advocate has invited our attention to the questions raised in memo of appeal under Section 260A of the Income Tax Act, 1961, before this Court and the judgment of the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. vs. Commissioner of Income Tax, reported at 1996 (64) CCH 1401. According to him, the revenue has effectively participated in hearing of Appeal by the I.T.A.T.
5. The question to be answered by this Court is only about the propriety on the part of and power with the I.T.A.T. to examine the ground raised before it orally for the first time. In Appeal Memo filed before this Court under Section 260A of the Income Tax Act, the questions of law are raised in para 10 and relevant question at subpara (ii) is in this respect. During arguments, our attention was invited to the pleadings in para 9 to urge that the pleadings in para 9 show the factual background in which the challenge has been raised.
6. Our attention has been invited to various judgments which consider the impact of omission to score out irrelevant limb or irrelevant clause in notice issued under Section 271(1) (c) of the Income Tax Act. The learned counsel for the appellant also at one stage ur
