SHRI RAJENDRA KUMAR SHARMA vs. THE JOINT COMMISSIONER OF INCOME TAX

Facts

The appellant-assessee, Shri Rajendra Kumar Sharma, filed a Special Appeal (Writ) against a judgment dated 14.03.2018 of the learned Single Judge, which had dismissed his writ petition. The writ petition challenged an order dated 08.03.2017 passed by the Income Tax Appellate Tribunal (ITAT), Jaipur Bench. The ITAT's order had recalled its earlier order dated 27.04.2016 to hear the assessee on additional grounds, following a miscellaneous application filed by the assessee. The assessee contended that while the ITAT allowed the recall on the first part of the additional grounds concerning an inspector's report, it failed to provide a specific finding on the second part, which related to the genuineness of an agreement dated 02.06.2011, an issue never raised by the revenue.

Held

The High Court held that the ITAT had erred in law by not passing a specific order on the second part of the additional grounds raised by the assessee. This second ground concerned the genuineness of an agreement dated 02.06.2011, which the assessee contended was never an issue before the lower authorities or argued by the revenue. The Court found that the ITAT had taken note of this ground but failed to provide any specific finding. Consequently, the High Court set aside the ITAT's order dated 08.03.2017 to the extent of the second part of the additional grounds. The Court directed that the assessee's application under Section 254(2) should be treated as allowed in toto with respect to both parts of the additional grounds. The Court further directed that the appeal, which was restored for hearing on the first part of the additional grounds, should now be heard and decided on both grounds. The appeal was disposed of with these directions.

Key Issues

1. Whether the ITAT erred in law by not passing a specific order on the second part of the additional grounds raised by the assessee in its application under Section 254(2) of the Income Tax Act, 1961, concerning the genuineness of the agreement dated 02.06.2011, which was not an issue before the lower authorities and was not argued by the revenue. Assessee's Contentions: The assessee argued that the ITAT, while recalling its earlier order to hear on additional grounds, erred by not giving a specific finding on the second part of the additional grounds. This ground pertained to the genuineness of an agreement dated 02.06.2011, which was never an issue before the assessing officer or the CIT(Appeals), nor was it argued by the revenue. The assessee relied on the fact that the revenue did not raise any argument on this point. Revenue's Contentions: The revenue, represented by Mr. R.B. Mathur, was not in a position to dispute that no argument was raised before the ITAT by the revenue regarding the genuineness of the agreement. However, the revenue did not dispute that the ITAT had taken note of the argument on behalf of the revenue and had not raised any doubt with regard to the genuineness of the agreement, and consequently, had not given any finding.