K. P. BALANARAYANA MARAR J. - The assessee is the Kerala State Co-operative Marketing Federation Ltd., an apex society, has been appointed as the monopoly procuring agent for raw cashewnuts for the whole of Kerala. The procurement is done through primary societies over 1,200 in number. There were only 86 members in the assessee-society as on April 1, 1977. The entire quantity of cashewnuts procured from the primary societies is processed by the apex society and delivered to the processing companies at the rates fixed by the Government. For the assessment year 1978-79 for which the accounting period ended on May 30, 1977, a draft assessment order was passed by the Income Tax Officer on March 16, 1981, determining the assessees total income at Rs. 11,82,230. The objection of the assessee was called for. The Income Tax Officer disallowed the claim of the assessee under section 80P(2)(a)(iii) of the Income Tax Act. He was of the view that cultivators to whom the agricultural produce belonged were not members of the assessee-society and as such the society is not entitled to the exemption under section 80P(2)(a)(iii). On appeal, the Commissioner (Appeals) held that the assessee would be entitled to exemption in respect of the income derived from the marketing of agricultural produce belonging to its members. Since the break-up of the figures regarding the quantum or value of material supplied by the primary societies who were not members of the society was not available, the Commissioner directed the Income Tax Officer to predetermine the income derived by the society from the marketing of the agricultural produce of its members by apportioning the income in the ratio of the turnover on the information being furnished by the assessee before August 30, 1983. The matter was carried by the assessee to the Income Tax Appellate Tribunal in second appeal. The Revenue filed cross-objections. Regarding the exemption claimed by the assessee under section 80P(2)(a)(iii), the Tribunal agreed with the Commissioner of Income Tax (Appeals) and the cross-objection filed by the Revenue was dismissed. The assessee has taken an additional ground claiming deduction of an amount of Rs. 6,05,646 accrued as per the Kerala General Sales Tax Act towards purchase tax for pepper, which the assessee omitted to claim in the assessment proceedings. This claim was not made either before the Income Tax Officer or before the Commissioner (Appeals). The Tribunal held that there is nothing in the Income Tax Act. which restricts the Tribunal to a determination of the questions raised before the departmental authorities. It was further held that all questions of law or facts which relate to the assessment of the assessee may be raised before the Tribunal. The assessee was permitted to raise the contention that an amount of Rs. 6,05,646 accrued as per the Kerala General Sales Tax Act towards the purchases tax for pepper and the assessee has by mistake failed to claim the same before the Income Tax Officer. The Tribunal remitted the matter to the file of the Commissioner of Income Tax (Appeals) to look into the matter afresh and decide the same according to law after giving an opportunity to the assessee of being heard in the matter. On the exemption claimed under section 80P(2)(a)(iii), the Tribunal held that the assessee would be entitled to exemption only if the assessee is engaged in the marketing of the agricultural produce of its members. The Tribunal refused to accept the contention of the assessee that marketing of the agricultural produce of even non-members is eligible for exemption under the aforesaid provision. Thereafter, at the instance of the Revenue, the following three question of law were referred to this court for decision :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law and on facts in finding that the assessee is entitled to exemption under section 80P(2)(a)(iii)
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in considering the additional ground raised by the assessee claiming deduction of an amount of Rs. 6,05,646 which was raised before the Tribunal, for the first time, and in remitting the case to the Commissioner of Income Tax (Appeals) for considering the additional ground
3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in finding that the assessee is entitled to claim deduction of Rs. 6,05,646 in the absence of any material on record in support of the claim "
The first question to be considered is whether the assessee is entitle to exemption under section 80P(2)(a)(iii) of the Income Tax Act. Section 80P grants deduction in respect of certain categories of income of a co-operative society. Section 80P(1) provides that in the case of a society being a co-operative society, the sums specified in sub-section (2) shall be deducted in computing the total income of the assessee. Sub-section (2)(a)(iii) stipulates that the whole of the amount of profits and gains of business attributable to the marketing of the agricultural produce of its members in the case of a co-operative society shall be deducted. "Co-operative society" is defined in section 2(19) of the. Co-operative society means a co-operative society registered under the Co-operative Societies Act, 1912 (Act 2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies. The assessee is an apex society registered under the Kerala Co-operative Societies Act. The Assessee can, therefore, claim the benefits conferred under section 80P(2)(a)(iii) of the. The assessee is a monopoly procuring agent for raw cashewnuts for the whole of Kerala. The procurement is done through primary societies over 1,200 in number. After procuring the cashew from the primary societies the entire quantity of cashewnuts would be processed by the apex society and then delivered to the processing companies at the selling rates fixed by the Government. The Income Tax Officer was of the view that the cultivators to whom the agricultural produce belonged were not members of the assessee-society and as such the society was no entitle to the exemption under section 80P(2)(a)(iii). On appeal, the Commissioner of Income Tax (Appeals) took the view that the assessee would be entitled to the exemption in respect of the income derived from marketing the agricultural produce belonging to its members. Since all the primary societies which supplied cashewnuts to the assessee were not members and since the break-up of the figures regarding the quantum or value of material supplied by agents who were members of the assessee-society and by primary societies and the service societies who were not members was not available, the Commissioner directed the Income Tax Officer to allow the assessee time till August 30, 1983, to furnish the break up of the figures of quantity/or value of agricultural produce supplied to them by the members of the appellant-society and by persons or societies which were not members of the appellant-society. The Income Tax Officer was directed to redetermine the income derived from the marketing of the produce of its members by apportioning the income in the ratio of the turnover. In case the assessee fails to furnish the information before the prescribe date, the total income will be computed assuming that they have not earned any income from marketing the agricultural produce of its members. The Appellate Tribunal concurred with this order and dismissed the cross-objection filed by the Revenue.
It is contended by learned counsel for the Revenue that the agriculture produce must be the produce of the members of the co-operative society. In the present case, the society is an apex society consisting of 86 members. Procurement is done through primary society more than 1,200 in numbers. It is, therefore, contended that the produce marketed by the assessee does not belong to the members of the society. Counsel would point our that even non-members had supplied cashewnuts to the society and the produce so supplied will not be the produce of a member of the society. Counsel has a further contention that the assessee cease to be mutual society when once it procured cashewnuts from non-members in which case, the produce marketed is not that of the members but of members and non-members. It is the contention that in such a case, the benefits of section 80P(2)(a)(iii) cannot be claimed by the society.
On the other hand, it is urged by learned counsel for the assessee that the words "agricultural produce of its members" do not mean "agricultural produce grown by its members" whereas the produce belongs to the members of the society. The contention is that primary societies are also members of the apex society and the produce market is that of the members of the society. In this connection, our attention is drawn to the decision in CIT v. Karjan Co-operative Cotton Sale, Ginning and Pressing Society Ltd. : [1981]129ITR821(Guj) . The concept of the term "marketing" came up for considerate in that decision and it was held that the concept was ownership of the agricultural produce. It is observed that the words used in section 80P are not "agricultural produce grown by its members" but "agricultural produce of its member". It was held that (headnote) :
"So long as the commodity brought to the assessee-society was agricultural produce and so long as that product belonged to its members, it was the agricultural produce of its members, be the member a co-operative society in itself or an individual member".
In that case, the assessee, an apex society, consisted of individual members as well as member-societies. The assessee derived income from ginning and pressing of cotton received from its members and others and also carried on activities of marketing cotton. Interest charges, godown charges and insurance charges recovered from the persons who purchased cotton from the assessee were found to be deductible items under section 80P(2)(a). In that context, it was held that the term "marketing" cannot be restricted only to the buying and selling activity.
The Madras High Court, in the decision in CIT v. Tamil Nadu Co-operative Marketing Federation Ltd. : [1983]144ITR74(Mad) , held that the expression "co-operative society" occurring in section 80P(1) covers any co-operative society, whether it is a primary society or an apex society, and hence the reference to members in clause (iv) of section 80P(2) can be taken to refer to the members of a primary society or members of an apex society, as the case may be. The whole of the amount of profits and gains of business of a co-operative society engaged in the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members is exempted under clause (iv) of section 80P(2)(a)(iii). It was also held that the benefit of section 80P is available to all the co-operative societies provided they satisfy the conditions set out in sub-section (2).
In the decision in CIT v. Guntur District Co-operative Marketing Society Ltd. : [1985]154ITR799(AP) , the Andhra Pradesh High Court had to consider whether supply of fertilizers to non-members will fall within the provision of sub-clause (iv) of section 80P(2)(a)(iii). It was held that there is no warrant for holding that only societies supplying agricultural implements. etc., to their members fall within that provision. In that case, a substantial quantity of fertilizers was supplied to the members of the society, although there were suppliers to non-members also. It was observed that the supply of fertilizers to non-members does not make it any the less a co-operative society engaged in the supply of fertilizers to its members.
In a later decision of the same High Court in CIT v. Mulkanoor Co-operative Rural Bank Ltd. : [1988]173ITR629(AP) , it was held that the agricultural produce marketed by the society should belong, at all points of time, to the agriculturists. It was made clear that only the income derived by a co-operative society from marketing the agricultural produce of its members earns exemption under clause (iii) of section 80P(2)(a).
In order to earn the exemption under section 80P(2)(a)(iii) it is sufficient if the agricultural produce belonged to the members of the society, as observed by the Gujarat High Court in CIT v. Karjan Co-operative Cotton Sale, Ginning and Pressing Society Ltd. : [1981]129ITR821(Guj) . The words used are not "agricultural produce grown by its members" but "agricultural produce of its members". The cashewnuts brought to the assessee-society were agricultural produce and that produce belonged to the primary societies who supplied the same to the assessee. The produce belonged to the primary societies who were member of the apex society. It is immaterial whether a member of the society is an individual member or a co-operative society by itself. The produce supplied by the primary societies who are members of the apex society is marketed by the apex society which is engaged in such marketing. The whole of the amount of profits and gains of the business attributable to such an activity is, therefore, liable to be exempted under section 80P(2)(a)(iii).
The operation of section 80P(2)(a)(iii) is not limited to the marketing of the agricultural produce of the individual members of a co-operative society, but also the agricultural produce belonging to the primary societies who are members of an apex society. There is a clear indication in section 80P itself to suggest that the Legislature did not intend to draw a distinction between the agricultural produce of individual members of a co-operative society. If the Legislature wanted to restrict the operation of section 80P(2)(a)(iii) to marketing of agricultural produce of individual members of a co-operative society, that would have been made clear in that provision itself. When the Legislature wanted to restrict the operation of a provision to a primary society, a specific provision has been made in that behalf in clause (b) of section 80P(2). That says that, in the case of co-operative society being a primary society engaged in supplying milk, oil seeds, fruits or vegetables raised or grown by its members to a federal co-operative society or the Government or a local authority or a Government company, the whole of the amount profits and gains of such business shall be deducted in computing the total income of the assessee. That sub-section specifically makes mention of milk, oil seeds, fruits or vegetables raise or grown by the members of a primary society. Only the profits and gains of such business are exempted under section 80P(2)(b). In the case of a co-operative society engaged in activities other that those specified in clause (a) or clause (b), deduction are allowed as provide in clause (c). In the case of a consumers Co-operative society, the maximum deduction allowable is Rs. 40,000 and in any other case Rs. 20,000. What a consumers co-operative society is, has been clarified in the Explanation to clause (c), Specific provisions are, therefore, seen made in section 80P itself wherever the legislature wanted to restrict the operation of a provision to a primary society or to a consumers Op-operative society. It, necessarily, follows that no such restriction is impose don section 80P(2)(a)(iii) The result is that the society can claim deduction in respect of the business of marketing of agricultural produce of its members including that of member-societies of an apex society.
An apex society, as defined in the Kerala Co-operative Societies Act, means a society having the whole of the State as its area of operation and having as its members only other societies with similar objects and declared as such by the Registrar. An individual can be a member of society. Any other society can also be a member. Even the Government can be a member of a co-operative society. The member of the apex society, as defined in section 2(a) of the Act, are only other societies with similar objects. The produce supplied by the primary societies who are members of the ape society, therefore, belong to the apex society since that is a produce of its members. It is not necessary that the produce should belong to the individual members of the primary society.
While considering the scope of clause (iv) of section 80P(2)(a)(iii), the Madras High Court, in CIT v. Tamil Nadu Co-operative Marketing Federation Ltd. : [1983]144ITR74(Mad) , observed that the expression "members" cannot be restricted to either a member of a primary society or an agriculturist alone. It was further held that if the expression "co-operative society" occurring in sub-section (1) of section 80P covers any co-operative society, whether it is a primary society or an apex society, then the reference to "members" in clause (iv) of sub-section (2) can be taken to refer to members of a primary society or members of an apex society, as the case may be. In that case, the Tribunal took the view that it could not have been the intention of the Legislature that apex societies should be denied the relief under section 80P. The Madras High Court agreed with that view taken by the Tribunal.
Learned counsel for the Revenue put forward a new and different plea that the assessee is not a mutual co-operative society since cashewnuts are procured from some societies who are non-members. Since the assessee deals with purchases from non-members, it cease to be a mutual society and the benefits conferred under section 80P(2)(a)(iii) are to be denied to such a society, according to counsel. This plea is stated to be basic or fundamental. We are of the view that this is an entirely different and new case. It was not put forward before the Appellate Tribunal. So, we are of the view that the said plea does not arise out of the order of the Appellate Tribunal.
Even on merits, the plea is without force. The principle of the decision in Dibrugarh District Club Ltd. v. CIT [1927] 2 ITC 521 (Cal), relied on by counsel for the Revenue, is not applicable to this case. The assessee in that case was a club. No shareholder was entitled to benefits and privileges unless elected as a member. Of the members, some were share holder and other were not. The profits of the club were being distributed every year as dividend to the shareholders. A question arose as to whether the profits of the club were assessable to Income Tax. It was held that the club was assessable on the full amount of its profits, as it was not a mere mutual trading society making "quasi-profits" by trading with its own members and returning such "profits" to its members. That principle cannot be extended to the facts the present case since the question of deduction of profits and gains of a co-operative society is to be determined with reference to the express provision contained in section 80P of the Income Tax Act. The profits and gains of the co-operative society engaged in the marketing of agricultural produce of its members are deductible from the total income of the assessee. The two aspects to be looked into are whether the society has marketed agricultural produce and whether that produce belongs to its member. The purchase of cashewnuts from non-members does not make the assessee-society any the less a co-operative society engaged in marketing the agricultural produce of its members. There is nothing in section 80P to take a different view.
In the light of the decisions referred to above and the reasons enumerated buy us, we are of the view that the assessee-co-operative society is eligible for the deduction of the whole of the amount of profits and gains of the business attributable to the marketing of agricultural produce of the members of that society. It is made clear that such benefit can be claimed only in respect of the produce of the members of the apex society which are 86 in number. The Commissioner of Income Tax found that deductions have to be made in respect of the supplies made by the members of the society. it was for that reason that the Income Tax Officer was directed to predetermine the income derived from the marketing of the produce of the members of the society. That finding has been concurred with by the Appellate Tribunal. We see no error of law in the conclusion reached by the Tribunal. The first question has, therefore, to be answered in favour of the assessee.
An additional ground was taken by the assessee before the Appellate Tribunal claiming deduction of an amount of Rs. 6,05,646 accrued as per the Kerals General Sales Tax Act towards purchase tax for pepper, which the assessee omitted to claim in the assessment proceedings. This claim was not made either before the Income Tax Officer or the Commissioner of Income Tax (Appeals). The assessee contended before the Tribunal that it was entitled to raise this ground. The departmental representative objected and contended that the ground cannot be raised at that stage in view of the decision in Addl. CIT v. Gurjargravures P. Ltd. : [1978]111ITR1(SC) . After considering the material on record and the facts and circumstances of the case the Tribunal permitted the assessee to raise that ground. The Tribunal held that all questions, whether of law or of fact which relate to the assessment of the assessee, may be raised before the Tribunal. It was also pointed out before the Tribunal that the same liability which accrued during the year in question and the assessee was entitled to claim the same. The matter was, therefore, remanded to the file to the Commissioner of Income Tax (Appeals) to look into the matter afresh and decide the same according to law after giving an opportunity to the assessee to be heard in the matter.
Learned counsel for the Revenue seriously challenges this finding and contends that the Appellate Tribunal has no authority to permit the assessee to raise a ground which was not taken by him before the Income Tax Officer or the Commissioner of Income Tax (Appeals). An error of law has been committed by the Tribunal according to counsel, in directing the Commissioner of Income Tax (Appeals) to look into the matter and to decide the same after giving an opportunity to the assessee to be heard in the matter. Counsel relies on the decision of the Supreme Court in Addl. CIT v. Gurjargravures P. Ltd. : [1978]111ITR1(SC) , which was cited before the Appellate Tribunal also. In that case, no claim was made by the assessee before the Income Tax Officer that he was entitled to exemption in respect of its profits under section 84 of the Income Tax Act. The Appellate Assistant Commissioner dismissed the appeal. The Tribunal took a different view and directed the Income Tax Officer to allow appropriate relief for the reason that, since the entire assessment was open before the Appellate Assistant Commissioner, there was no reason for not entertaining the claim for the assessee. On a reference by the Tribunal, the High Court agreed with the Tribunals view. On appeal, the Supreme Court reversed the decision of the High Court and held that since neither was any claim made before the Income Tax Officer regarding the relief under section 84 nor was there any material on record in support thereof, the Tribunal was not competent to hold that the Appellate Assistant Commissioner should have entertained the question of relief under section 84 or to direct the Income Tax Officer to allow the relief. This decision of the Supreme Court reported in Jute Corporation of India Ltd. v. CIT : [1991]187ITR688(SC) . It was held therein that the power of the Appellate Assistant Commissioner is coterminous with that the Income Tax Officer and there appears to be no order on an additional ground even if not raised before the Income Tax officer. It was further observed that, even otherwise, an appellate authority while hearing the appeal against the order of a subordinate authority, has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations if any, prescribed by the statutory provisions. It was further held (p. 693) :
"In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There appears to be no good reason and none was place before us to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income Tax Officer."
The Supreme Court referred to an earlier three-judge Bench decision in CIT v. Kanpur Coal Syndicate : [1964]53ITR225(SC) , where it was held that the scope of the power of the Appellate Assistant Commissioner is co-terminus with that of the Income Tax Officer. He can do what the Income Tax Officer can do and also direct him to do what he has failed to do. The Supreme Court found favour with the view expressed by a Division Bench of the Calcutta High Court in Rai Kumar Srimal v. CIT : [1976]102ITR525(Cal) , where it was held that the Appellate Assistant Commissioner was entitled to admit new grounds or evidence either suo moto or at the invitation of the parties. It was further held therein that, if the Appellate Assistant Commissioner is acting on being invited by the assessee, then there must be some explanation to show that the failure to adduce evidence earlier sought to be adduced before the Appellate Assistant Commissioner was not willful and not unreasonable. The Supreme Court further held (p. 695 of 187 ITR) :
"There may be several factors justifying the raising of such new plea appeal, and each case has to be considered on its own facts. If the Appellate Assistant Commissioner is satisfied, he would be acting within his jurisdiction in considering the question so raised in all its assets. Of course, while permitting the assessee to raise an additional ground, the Appellate Assistant Commissioner should exercise his desecration in accordance with law and reason. He must be satisfied that the ground raised was bonafide and that the same could not have been raised earlier for good reasons. The satisfaction of the Appellate Assistant Commissioner depends upon the facts and circumstances of each case and no rigid principles or any hard and fast rule can be laid down for this purpose."
In the decision cited above, the Supreme Court was considering the power of the Appellate Assistant Commissioner under section 251 of the Income Tax Act. Wide powers are conferred on the Commissioner under this section and he is competent to examine all matters covered by the assessment order. He can also correct the assessment even to the prejudice of the assessee but in case he proposes to enhance the assessment or penalty or to reduce the amount of refund, he can do so only after giving an opportunity to the assessee of showing cause against such enhancement or reduction. He can even permit the assessee to raise an additional ground provided that the additional ground was made bona fide. The Supreme Court observed in the decision cited above that no rigid principles or hard and fast rule can be laid down in the matter of considering the decision of the Appellate Assistant Commissioner regarding the additional ground raised in appeal The appellate Assistant Commissioner has therefore, wide powers. His power is coterminous with that of the Income Tax officer. The Commissioner is entitled to admit a new ground or evidence. As held by the Supreme Court in Jute Corporation of India Ltd.s case : [1991]187ITR688(SC) , the Appellate Assistant Commissioner should exercise his discreation in accordance with law and reason and must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons.
Has the Appellate Tribunal the same powers as that of the Commissioner of Income Tax (Appeals) Is the Tribunal entitled to admit a new ground which has not been raised before the lower authorities These are the questions which require answers in these references The Tribunal gets power under section 254(1) of the Income Tax Act which provides that the Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders, thereon as it thinks fit. Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963, enables the Tribunal to permit the appellant to urge any ground not set forth in the memorandum of appeal. That rule provides that the appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal. It is further provided that it is open to the Tribunal to pass its decision on a ground not set forth in the memorandum of appeal and not taken by leave of the Tribunal provided the party affected thereby has been afforded sufficient opportunity of being heard on that ground An appellant before the Tribunal can, therefore, urge a new ground in appeal only with the leave of the Tribunal. The Tribunal has thus jurisdiction to permit the appellant to raise any ground which has not been raised before the assessing authority or the Commissioner of Income Tax (Appeals).
The powers of the appellate authorities under the Income Tax Act had come up for consideration in three decisions of the Supreme Court. (1) CIT v. McMillan and Co. : [1958]33ITR182(SC) , (2) Hukumchand Mills Ltd. v. CIT : [1967]63ITR232(SC) and (3) CIT v. Mahalakshmi Textile Mills Ltd. : [1967]66ITR710(SC) . In McMillans case [1958] 33 ITR 182 [LQ/SC/1957/107] , the Supreme Court held that the appellate authoritys power are co-equal to those of the assessing authority. It was further held that even though a particular statutory provision mentions by name only the assessing authority and not the appellate authorities, as a matter of construction, that power must be held to inhere even in the appellate stage, in the same way the assessing authority would do in the assessment in first instance.
In Hukumchand Mills case : [1967]63ITR232(SC) , the respondent who was the Revenue raised a new ground for the first time before the Tribunal. The Supreme Court laid done that the Tribunal possessed the requisite power to entertain that new point. The Supreme Court further held that the rules framed by the Tribunal for regulating their own procedure including the one relating to additional ground are merely self regulating in character and do not in any way circumscribe or control the power of the Tribunal as an appellate body under the Income Tax Act.
In CIT v. Mahalakshi Textile Mills Ltd. [1967] 66 ITR 710 [LQ/SC/1967/197] , the Supreme Court held that there is nothing in the Income Tax Act which restricts the Tribunal to the determination of questions raised before the departmental authorities. It was further held that all question, whether of law or of facts, which relate to the assessment of the assessee may be raised before the Tribunal. It was also held that the right of the assessee to relief is not restricted to the plea raised by him before the departmental authorities.
After referring to these three decisions, the Madras High Court, in CED v. R. Brahadeeswaran : [1987]163ITR680(Mad) , observed that the appellant before the Tribunal can raise any new or additional point for the first time in appeal before that before the body even though it had not been raised in any forms at early stages, and, in such a situation, the Tribunal is duty bound to entertain that ground and render a determination either themselves or by remanding the matter, if further investigation into the facts was warranted. It was also held that the appellate power under the taxing enactments is in no way different in substance from the assessment power exercisable by the assessing authority in the first instance.
After taking note of the special powers of taxing authorities for rectification of mistakes, for reopening of assessments, for making reassessments and the like, the Madras High Court, in Brahadeeswarans case : [1987]163ITR680(Mad) , observed that these provisions ensure that nothing which the statute seeks to get at escapes from beings brought under the charge in an assessment. In the same way, the taxing enactment carries provisions which act as a corrective to tendencies of quite an opposite kind, namely, overassessments, wrong assessments on those who are liable and cases of that kind. It is further observe that these measures are all directed to the end that the taxpayer is not mulcted of more than what is strictly due from him under the taxing enactment. For these reasons it was held that the real function of an appeal against an assessment must be considered to be the same as the function of the assessment itself and not in any way different from it.
Following the decisions of the Supreme Court cited above and agreeing with the view expressed by the Madras High Court in Brahadeeswarans case : [1987]163ITR680(Mad) , we hold that an appellant before the Tribunal could raise any new or additional point for the first time in appeal before the Tribunal even though it had not been raised in any form either before the assessing authority or before the Commissioner of Income Tax (Appeals). We further hold that when once any such new or additional ground is raised before the Tribunal, they are duty bound to entertain that ground and render a decision thereon either themselves or by remanding the matter if further investigation into the facts is necessitated.
The Appellate Tribunal permitted the assessee to raise the additional ground claiming deduction of the amount accrued as per the Kerala General Sales Tax Act towards purchases tax for pepper. Accepting the contention of the assessee that it was omitted to be claimed before the Income Tax Officer, the assessee was also found entitled to claim the same since that is a statutory liability which accrued during the year in question. A contention was also raised before the Tribunal that the same liability was allowed in a subsequent assessment year. It was for these reasons that the Tribunal permitted the assessee to raise the additional ground and remitted the matter to the file of the Commissioner of Income Tax (Appeals) to look into the matter afresh and decide the same according to law.
In view of the legal position enunciated above, the Tribunal was right in permitting the assessee to raise an additional ground. The jurisdiction conferred on the Tribunal has been properly exercised in the present case and no error of law has been committed by the Tribunal. This question also has to be answered in favour of the assessee.
The third question referred to this court does not arise out of the order of the Tribunal. No finding is seen to have been rendered by the Tribunal on the claim for deduction of Rs. 6,05,646 whereas the Tribunal has only remitted the matter to the file of the Commissioner of Income Tax (Appeals) to look into the matter afresh and decide the same according to law after giving an opportunity to the assessee of being heard in the matter. We, therefore, decline to answer this question.
Our answers to the questions referred for decision are :
Question No. 1 : Answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
Question No. 2 : Answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
Question No. 3 : We decline to answer the question.
A copy of this judgment under the seal of the court and the signature of the Registrar shall be forwarded to the Income Tax Appellate Tribunal, Cochin Bench.
