Issue notice. Ms. Suruchii Aggarwal, advocate accepts notice.
The narrow ground on which the appellant-assessee assails the order of the Income-tax Appellate Tribunal (ITAT) in I. T. A. No. 361/Del/2011 and CO No. 8/Dell/2013 is that the impugned order was in error by refusing to consider the cross-objections and the grounds urged by the assesseeappellant.
For the assessment year 2000-01, the original assessment had been completed. In the course of regular assessment for the assessment year 2002-03, the Assessing Officer (AO). had the occasion to examine the veracity of certain entries claimed to be share application amounts received to the tune of Rs. 50 lakhs. The assessment was completed after appropriate enquiries were made from such share applicants on scrutiny basis under section 143(3). Subsequently, search proceedings took place in respect of the assessee's business premises on December 9, 2005. Notice was issued pursuant to which a return was filed on October 31, 2007 under section 153A. The Assessing Officer completed the assessment pursuant to the search on December 31, 2007 and added back the said amount of Rs. 50 lakhs. In the course of the appeal preferred to the Commissioner of Income-tax (Appeals), the assessee had inter alia urged as follows:
"3. On the basis of the aforesaid factual position addition made on account of unexplained share application amounting to Rs. 50,00,000 for the assessment year 2000-01 deserves to be deleted as : ...
(ii) No corresponding seized material, much less incriminating material was found in the course of search for the subjected addition. It may kindly be appreciated that the assessment under section 153A on the basis of the search under section 132 cannot and should not be equated to regular/normal scrutiny assessment under section 143(3)."
The Commissioner of Income-tax (Appeals), however, did not discuss this issue but returned the finding in favour of the assessee which allowed the said deletion of Rs. 50 lakhs.
The Revenue appealed to the Income-tax Appellate Tribunal. The assessee filed cross-objections-though belatedly. By the impugned order, the Income-tax Appellate Tribunal refused to entertain the application under rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963, stating that the contention sought to be urged by it could not inter alia be entertained because it was never taken in the first instance before the Commissioner of Income-tax (Appeals).
6 Learned counsel points out that a bare look at para. 3(ii) of the Commissioner of Income-tax's order would show that the ground was in fact urged and was accepted by the Commissioner of Income-tax (Appeals) even though there was no discussion. It was submitted that the Revenue could not get hold of any material in the course of search and that the addition of Rs. 50 lakhs could not be made precisely on the basis of which the Commissioner of Income-tax (Appeals) granted relief. Leamed counsel for the Revenue urges that the question as to whether and to what extent addition can be made in search proceedings should not be decided in this appeal since orders under section 1S3A are wider than the pre-existing section 1S8BC.
7 We have considered the submissions. For the purpose of this appeal, we do not propose to launch an examination of the difference between the phraseology of the old law and section 1S3A. However, what is apparent is that further in regard to the assessee's contention that no material was found to support the addition-which was in fact gone into in scrutiny assessment, the Income-tax Appellate Tribunal was duty-bound to consider the submissions rather than brushing aside the cross-objections as it has done in the present instance. In the circumstances, the impugned order to the extent it denies the assessee the right to urge cross-objection is hereby set aside. The right of the parties to urge contentions in support of their submissions on the merits is reserved. The appeal is partly allowed in the above terms.