Law:

Section:

Section 251 of the Income-tax Act, 1961 - Appellate Assistant Commissioner/ Commissioner (Appeals) - Powers of - Assessment year 1974-75 - For relevant assessment year assessee did not claim deduction of its liability to pay purchase tax as assessee entertained a belief that it was not liable to pay purchase tax - But later on it was assessed to purchase tax and claimed deduction of it during pendency of appeal before AAC - Whether Tribunal was justified in holding that AAC could not admit additional ground for deduction of purchase tax liability - Held, no Section 256, read with section 251, of the Income-tax Act, 1961 - Reference - Question of law - Whether on facts stated under heading 'Appellate Assistant Commissioner/Commissioner (Appeals) - Powers of', - Tribunal was justified in refusing to make reference and High Court was justified in refusing to call for reference under section 256(2) - Held, no FACTS The assessee, a Government Corporation, engaged in jute industry had been assessed to income-tax for the relevant assessment year. During the pendency of its appeal before the AAC, it raised an additional ground claiming deduction of certain amount on account of liability of purchase tax. The AAC permitted the assessee to raise the additional ground and after hearing the ITO he accepted the assessee's claim and allowed deduction of the said amount in computing the total income of the assessee. On further appeal by the revenue, the Tribunal held that the AAC had no jurisdiction to entertain the additional ground or to grant relief to the assessee on a ground which had not been raised before the ITO. The Tribunal further rejected the assessee's application for reference under section 256(1). On an application under section 256(2), the High Court also refused to call statement of the case. On special appeal leave petition under article 136 of the Constitution: HELD The Act does not contain any express provision debarring an assessee from raising an additional ground in appeal and there is no provision in the Act placing restriction on the power of the appellate authority in entertaining an additional ground in appeal. In the absense of any statutory…

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