Entire law on what is “Additional Ground” & power of Tribunal to admit it reviewed
The assessee filed an appeal before the Tribunal in which it raised the ground (in Form 36) that u/s 153A, the AO was not entitled to make additions which were not based on incriminating material found during the search. This ground was not raised before the AO or the CIT (A). Before the Special Bench, the department argued that as the ground was not raised before the lower authorities, it was an additional ground and could not be entertained. HELD by the Special Bench:
(i) The assessee’s argument that as the ground was taken in the memorandum of appeal, it was not an “additional ground” for which leave was required from the Tribunal is not acceptable because s. 253(1) permits an assessee “aggrieved” to file an appeal. A person can be “aggrieved” only if a ground had been raised and it is decided against him. S. 253(1) bars a ground which was not raised and not decided by the CIT(A) because there can be no grievance in respect of a matter which is not raised at all (Pokhraj Hirachand 49 ITR 293 (Bom) followed);
(ii) On the question whether such a ground can be raised for the first time before the Tribunal, the subject matter of an appeal consist of three elements (a) the grounds taken in the memorandum of appeal, (b) the grounds for which leave is allowed by the Tribunal and (c) grounds taken by the respondent for supporting the order of the CIT(A). The Tribunal is not confined only to issues arising out of the appeal before the CIT(A) but has the discretion to allow a new ground to be raised. If a pure question of law arises for which facts are on record of the authorities below, the question should be allowed to be raised if it is necessary to assess the correct tax liability. The submission that the ground could not be raised earlier as the assessee did not have the services of an advocate at its command is reasonable and bona-fide (NTPC 229 ITR 383 (SC) followed).