ivil Appeal No 1935 of 1981
From the Judgment and Order dated 84
1980 of the Calcutta High Court in Matter No 143 of 1980
Sukumar Bhattacharya and GS Chaterjee for the Appellant
J Ramamurthy
g Rajappa and Ms A Subhashini for the Respondents
The Judgment of the Court was delivered by KN SINGH J
The appellant is a Government Corporation engaged in jute industry
It was assessed to income tax for the assessment year 1974 75 by the Income Tax Officer
The assessee preferred appeal before the Appellate Assistant Commissioner
During the hearing of the appeal the assessee raised an additional ground claiming deduction of Rs 1154995 on the ground of liability of Purchase Tax
The assessee claimed that in view of the decision of this Court in Kedarnath Jute Company Limited vs Commissioner of Income Tax 19771 the aforesaid amount being tax liability should be deducted from its income for purposes of charging tax
The Appellate Assistant Commissioner permitted the assessee to raise the additional ground and after hear ing the Income Tax Officer he accepted the assessee s claim and allowed deduction of Rs 1154995 in computing the total income of the assessee for the assessment year 1974 75
The Revenue preferred appeal before the Income Tax Appellate Tribunal
The Tribunal held that the Appellate Assistant Commissioner had no jurisdiction to entertain an additional ground or to grant relief to the assessee on a ground which had not been raised before the Income Tax Officer
The Tribunal set aside the order of the Appellate Assistant Commissioner placing reliance on the decision of this Court in Addl
Commissioner of Income Tax Gujarat vs Gurjargravures P Ltd 1978 111 ITRI
The assessee made application before the Tribunal under Section 2561 of the Income Tax Act 1961 for making reference to the High Court
The Tribunal refused to refer the question on 343 the findings that the question stood covered by this Court s decision in Gurjargravures supra
The assessee thereupon approached the High Court under Section 2562 of the Act for calling the statement of case and reference from the Appellate Tribunal
A Division Bench of the Calcutta High Court held that the Tribunal was right in rejecting the assessee s application therefore it refused to call state ment of case
The assessee thereupon approached this Court under Article 136 of the Constitution
and obtained leave
Hence this Appeal
The question of law which the assessee sought to be referred to the High Court under Section 2561 of the Act was Whether on the facts and in the circumstances of the case
the Income Tax Appellate Tribunal was justified in holding that the Appellate Assistant Commissioner of Income Tax had exceeded his powers in entertaining the additional ground of appeal taken before him in respect of the claim for deduc tion of a sum of Rs 1154995 representing liability for raw jute Purchase Tax
 Section 251 of the Income Tax Act hereinafter referred to as the Act  prescribes power of the Appellate Authority hearing appeal against the order of
Income Tax Officer
Clause a of Section 25 11 confers power on the Appellate Authority namely the Appellate Assistant Commissioner now after the Amendment of 1987 the Deputy Commissioner Ap peals according to which Appellate AUthority while hearing appeal against an order of assessment
has power to confirm
reduce enhance or annual the assessment he is further empowered to set aside the assessment and remit the case back to the Assessing Officer for making a fresh assessment in accordance with its directions
after making such further inquiry as may be necessary
If a direction is issued by the Appellate Authority the Assessing Officer is required to proceed to make such fresh assessment and determine the amount of tax if any
payable on the basis of fresh assess ment
The Appellate Assistant Commissioner is thus invested with wide powers under section 2511a of the Act while hearing an appeal against the order of assessment made by the Income Tax Officer
The amplitude of the power includes power to set aside the assessment order or modify the same
The question is whether the Appellate Assistant Commissioner while hearing an appeal under section 2511a has jurisdiction to allow the assessee to raise an additional ground in assailing the order of the assessment before it
The Act does not contain any express provision debarring an assessee from raising an addi 344 tional 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 absence of any statutory provision
general principle relat ing to the amplitude of appellate authority s power being co terminus with that of the initial authority should nor mally be applicable
But this question for the purposes of the Income Tax Act has been an intricate and vexed one
There is no uniformity in the judicial opinion on this question
Section 31 of the Income Tax Act 1922 also conferred power on the Appellate Assistant Commissioner to hear appeal against the assessment order made by the Income Tax Officer
The Chagla CJ of the Bombay High Court considered the question in detail in Narrondas Manordass vs Commissioner of Income Tax and held that the Appellate Assistant Commissioner was empowered to correct the Income Tax Officer not only with regard to a matter which had been raised by the assessee but also with regard to a matter which may have been considered by the Income Tax Officer and determined in the course of the assessment
The High Court observed that since the Appellate Assistant Commissioner had revising authority against the decisions of the Income Tax Officer a revising authority not in the narrow sense of revising those matters which the assessee makes a grievance but the subject matter of the appeal not only he had the same powers which could be exercised by the Income Tax Officer
These observations were approved by this Court in Commissioner of Income Tax vs McMillan  Co  the Appellate Assistant Commissioner on an appeal preferred by the assessee had jurisdiction to invoke for the first time provisions of Rule 33 of the Income Tax Rules 1922 for the purpose of computing the income of a nonresident even if the Income Tax Officer had not done so in the assessment proceedings
But in Commissioner of Income Tax Bombay vs Shapporji Pallon Ji Mistry 1962 44 ITR 891 this Court while considering the extent of the power of the Appellate Assistant Commissioner referred to a number of cases decided by various High Courts including Bombay High Court judgment in Narrondas case and also the decision of this Court in McMillan  Co case and held that in an appeal filed by the assessee the Appellate Assistant Commissioner has no power to enhance the assessment by discovering new sources of income not considered by the Income Tax Officer in the order appealed against
It was urged on behalf of the Revenue that the words enhance the assessment occurring in section 31 were not confined to the assessment reached through particular process but the amount which ought to have been computed if the true total income had been 345 found
 The Court observed that there was no doubt that this view was also possible but having regard to the provisions of Sections 34 and 33B which made provisions for assessment of escaped income from new sources the interpretation suggested on behalf of the Revenue would be against the view which had held the field for nearly 37 years
In this view the Court held that the Appellate Assistant Commissioner had no power to enhance the assessment by discovering new sources of income
This decision does not directly deal with the question which we are concerned
Power to enhance Tax on discovery of new source of income is quite different than granting deduction on the admitted facts fully supported by the decision of this Court
If the tax liability of the assessee is admitted and if the Income Tax Officer is af forded opportunity of hearing by the Appellate Authority is allowing the assessee s claim for deduction on the settled view of law these appears to be no good reason to curtail the powers of the appellate authority under Section 25 11a of the Act
In Commissioner of Income Tax UPv
Kanpur Coal Syndi cate a three Judge Bench of this Court discussed the scope of Section 313a of the Income Tax Act 1922 which is almost identical to Section 2511a
The Court held as under If an appeal lies Section 31 of the Act describes the powers of the Appellate Assistant Commissioner in such an appeal
Under Section 313a in disposing of such an appeal the Appellate Assistant Commissioner may in the case of an order of assessment confirm reduce enhance or annul the assessment under clause b thereof he may set aside the assessment and direct the Income Tax Officer to make a fresh assessment
The Appellate Assistant Commissioner has therefore plenary powers in disposing of an appeal
The scope of his power is conterminous 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  emphasis supplied The above observations are squarely applicable to the interpretation of section 25 11a of the Act
The declaration of law is clear that the power of the Appellate Assistant Commissioner is co terminus with that of the Income Tax Officer if that he so there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income Tax Officer
No 346 exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power
Even otherwise an Appellate Authority while hearing 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 provi sions
In the absence of any statutory provision the Appel late 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 placed before us to justify curtailment of the power of the Appellate Assist ant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income Tax Officer
In Additional Commissioner of Income Tax Gujarat vs Gurjargravures P Ltd supra this Court has taken a dif ferent view holding that in the absence of any claim made by the assessee before the Income Tax Officer regarding relief he is not entitled to raise the question of exemp tion under Section 84 before the Appellate Assistant Commis sioner hearing appeal against the order of Income Tax Offi cer
In that case the assessee had made no claim before the Income Tax Officer for exemption under Section 84 of the Act no such claim was made in the return nor any material was placed on record supporting such a claim before the Income Tax Officer at the time of assessment
The assessee for the first time made claim for exemption under Section 84 before the Appellate Assistant Commissioner who rejected the claim but on further appeal the Appellate Tribunal held that since the entire assessment was open before the Appellate Assistant Commissioner there was no reason for his not entertaining the claim or directing the Income Tax Officer to allow appropriate relief
On a reference the High Court upheld the view taken by the Tribunal
On appeal this Court set aside the order of the High Court as it was of the view that the Appellate Assistant Commissioner had no power to interfere with the order of assessment made by Income Tax Officer on a new ground not raised before the Income Tax Officer and therefore the Tribunal committed error in directing the Appellate Assistant Commissioner to allow the claim of the assessee under Section 84 of the Act
Apparent ly this view taken by two Judge Bench of this Court appears to be in conflict with the view taken by the three Judge Bench of the Court in Kanpur Coal Syndicate s case supra
It appears from the report of the decision in Gujarat case the three Judge Bench decision in Kanpur Coal Syndicate supra case was not brought to the notice of the Bench in the Gurjargravures P Ltd supra
In the 347 circumstances the view of the larger Bench in the Kanpur Coal Syndicate supra holds the field
However we do not consider it necessary to over rule the view taken in Gurjar gravures P Ltd supra case as in our opinion that deci sion is rounded on the special facts of the case as would appear from the following observations made by the Court As we have pointed out earlier the statement of case drawn up by the Tribunal does not mention that there was any material on record to sustain the claim for exemption which was made for the first time before the Appellate Assistant Commissioner
We are not here called upon to consider a case where the assessee failed to make a claim though there was no evidence on record to support it or a case where a claim was made but no evidence or insufficient evidence was ad duced in support
In the present case neither any claim was made before the Income Tax Officer nor was there any mate rial on record supporting such a claim
 The above observa tions do not rule out a case for raising an additional ground before the Appellate Assistant Commissioner if the ground so raised could not have been raised at that particu lar stage when the return was filed or when the assessment order was made or that the ground became available on account of change of circumstances or law
There may be several factors justifying raising of such new plea in 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 aspects
Of course while permitting the assessee to raise an additional ground the Appellate Assistant Commissioner should exercise his discre tion in accordance with law and reason
He must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons
The satisfac tion of the Appellate Assistant Commissioner depends upon the facts and circumstances of each case and no rigid prin ciples or any hard and fast rule can be laid down for this purpose
In Rai Kumar Srimal vs Commissioner of Income Tax West Bengal 111 a Division Bench of Cal cutta High Court presided over by Sabyasachi Mukharji J as he then was held that the Appellate Assistant Commission er was entitled to admit new ground or evidence either suo motu or at the invitation of the parties
If he is acting on being invited by the assessee then there must be some ground for admitting new evidence in the sense that there must be some explanation to show that the failure to adduce earlier the evidence sought to be adduced before the Appel late Assistant Commissioner was not wilful and not unreason able
This view is reasonable and it finds favour with us
348 In the instant case the assessee was carrying on manu facture and sale of jute
In the assessment year of 1974 75 he did not claim any deduction on its liability to pay Purchase Tax under the provisions of the Bengal Raw Jute Taxation Act 1941 as the appellant entertained a belief that it was not liable to pay Purchase Tax under the afore said Act
But later on it was assessed to Purchase Tax and the order of assessment was received by it on 2311
The appellant disputed the demand and filed an appeal before the Appellate Authority and obtained stay order
The asses see thereafter claimed deduction for the amount of Rs 1154995 towards his liability to pay Purchase Tax as deduction for the assessment year 1974 75
The assessee had not actually paid the Purchase Tax as he had obtained stay from the Appellate Authority nonetheless its liability to pay tax existed and it was entitled to deduction of Rs 1154995 as was held by this Court in Kedarnath Jute Mfg Co Ltd vs Commissioner of Income Tax Central Calcutta There was no dispute about these facts
In these circumstances the Appellate Assistant Com missioner allowed the assessee to raise this question and after hearing the Income Tax Officer he granted the deduc tion from the assessee s income
The Tribunal took a con trary view placing reliance on the decision of this Court in Gujargravures P Ltd supra
As already discussed the facts in the instant case are quite clear unlike the facts involved in Gurjargravures case
We are therefore of the view that the view taken by the Appellate Tribunal and the High Court is not sustainable in law
In our opinion the High Court and Tribunal both committed error in refusing to state the case or making a reference
The next question which arises for consideration is to know what order should be passed in the present circum stances
In view of the findings recorded by us ordinarily we should direct the High Court to call for the statement of case from the Tribunal and thereupon decide the matter afresh but this procedure would be time consuming
Since we have already discussed the correct position of law we do not consider it necessary to follow the usual procedure
Since the view taken by the Income Tax Appellate Tribunal is not sustainable in law we grant leave against the order of the Appellate Income Tax Tribunal under Article 136 and set aside the same and remit the matter to the Appellate Income Tax Tribunal to consider the merit of the deduction permit ted by the Appellate Assistant Commissioner
If the Tribunal thinks it necessary it may remand the matter to the Appel late Assistant Commissioner now Deputy Commissioner of Appeals for reheating
The appeal is accordingly disposed of
There will be no order as to costs
GN Appeal disposed of


Summary:
On the basis of a fake order in a non existent writ petition said to have been passed by a Single Judge of the Allahabad High Court on 2551990 some persons obtained an order dated 461990 from the Lucknow Bench of the High Court which directed cancellation of the scheduled competi tive admission examination to the Post Graduate Medical Courses in the Medical Colleges of the State of Uttar Pra desh and
granted admission on the basis of the marks ob tained in the MBBS Exams
Some admissions were secured in the medical colleges of the State on the basis of the High Court s orders
Against the High Court s orders the UP Junior Doctors  Action Committee has preferred this appeal by special leave
Allowing the appeal this Court HELD 11 Purity of the judicial stream should not be allowed to be polluted by a clandestine move and citizens should not be misled by actions of the conspirators
12 There is a deep seated conspiracy which brought about the fake order from Allahabad High Court and on the basis thereof a subsequent direction has been obtained from the Lucknow Bench of the same High Court
The first order being non existent is declared to be a bogus one
The second order made on the basis of the first order is set aside as having been made on the basis of misrepresentation
Conse quently those who have taken admission on the basis of such orders that is on the basis of the MBBS result without going through a selection examination cannot be allowed to continue in the Post Graduate 131 Courses
Accordingly admissions if any made on the basis of orders of the High Court shall stand vacated
133F G 134A 2
Though the persons who have taken admission on the basis of the High Court s order are not before this Court yet the circumstances in which such benefit has been taken by them do not justify attraction of the application of rules of natural justice of being provided an opportunity to be heard
133G H 3
Appropriate investigation should be done by the Central Bureau of Investigation and the persons behind the deep seated fraud should be brought to book without any delay
134C Dr Dinesh Kumar vs MLN Medical College Allahabad   and State of Bihar vs Dr Sanjay Kumar Sinha AIR 1990 SC 749 cited