Law:

Section:

Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Powers of - Assessment years 1969-70 and 1970-71 - Whether, a new plea or a new ground can be taken or can be allowed to be raised for first time in appeal before Tribunal provided Tribunal give to party affected by such plea a sufficient opportunity of being heard - Held, yes Words and phrases: Words 'thereon' and 'as its think fit' as occurring in section 254 of the Income-tax Act, 1961. FACTS The assessee, an association of persons, leased out the cinema building to 'J'. In the return for the relevant assessment years the assessee did not disclose the income from the lease rent on the plea that it was assessable in the hands of the members of the association of persons. However, the ITO included certain amount in the income of the assessee under the head 'Income from house property'. On appeal, the AAC held that the income from the lease rent of the cinema building was assessable under the head "Property income" and said income was taxable proportionately in the hands of co-owners. On appeal, the revenue contended before the Tribunal that the income from the lease rent of the cinema building was assessable under the head 'Income from other sources' instead of under the head Income from lease property. The Tribunal refused to entertain the plea on the grounds that the ITO had not taken this plea at any stage in the past and that if said plea was accepted, the direction of Tribunal might result in enhancement of income. On reference: HELD A bare reading of sub-sections (1) and (2) of section 254 would reveal that the Appellate Tribunal has the power or the jurisdiction to pass orders in appeal as it thinks fit. The word 'thereon' occurring in section 254(1) means an appeal and the words 'as it thinks fit' are general and confer powers of the widest amplitude on the Tribunal. It is true that under section 251, the AAC possesses the powers of confirmation or reduction and enhancement or annulment of the assessment and he may also remand the case to the ITO for making a fresh assessment. Thus, specific powers of enhancement have been conferred on the AAC or, as the case may be, on the Commissioner…

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