Law: Income Tax Act, 1961

Section: 254

Income-tax----Appeal to Appellate Tribunal---Powers of Tribunal---Tribunal has the power to permit additional grounds to be raised before it---Indian Income-tax Act, 1961, 5.254---[CTT v. Karamchand Premchand (Private) Ltd. (1969) 74 ITR 254 (Guj.); CTT v. Celluloses Products of India Ltd. (1985) 151 ITR 499 (Guj.); Hukumchand and Mannalal Co. v. CTT (1980) 126 ITR 251 (MP); CIT v. Anand Prasad (1981) 128 ITR 388 (Delhi) dissented from and Ugar Sugar Works Ltd. v. CIT (1983) 141 ITR 326 (Bom.) overruled]. The basic purpose of an appeal in an income-tax matter is to ascertain the correct tax liability of the assessee in accordance with law. Therefore, at both the stages, either before the Appellate Assistant Commissioner or before the Appellate Tribunal, the appellate authority can consider the proceedings before it and the material on record before it for the purpose of determining the correct tax liability of the assessee. The appellate authorities, of course, cannot travel beyond the proceedings and examine new sources of income. For this purpose, other separate remedies are provided to the Department-under the Income-tax Act. But, apart from this, there is nothing in section 254 or section 251 of the Income-tax Act, 1961, which would indicate that the appellate authorities are confined to considering only the objections raised before them or allowed to be raised before them either by the assessee or by the Department, as the case may be. They can consider the entire proceedings to determine the tax liability of the assessee. Under section 254(1), the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, "pass such orders thereon as it thinks fit". This gives very wide power to the Appellate Tribunal to pass, on the appeal, such orders as it may think fit. The Department also has a right to file an appeal or cross-objections, as the case may be, if it is aggrieved by any part of the order of the Appellate Assistant Commissioner. The word "thereon" in section 254 does not, in any manner, restrict the jurisdiction of the Appellate Tribunal. The word "thereon" merely refers, to the appeal. It does not refer to the…

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