Delhi HC Judgement on Scope of Rule 27 of ITAT Rules 1963
Parties : Sanjay Sawhney vs. PCIT
Decision of : Hon’ble Delhi High Court
Date of Order : May 18, 2020
ITA No. 834/2019
Issue relating to : Rule 27 of ITAT Rules, 1963 – Sec. 253(4)
FACTS OF THE CASE :
During first appeal, CIT(A) had rejected jurisdictional legal grounds raised by the assessee. However, ultimately the matter was decided in favour of the Assessee based on merits.
Department filed appeal before ITAT but no cross objection was filed by the assessee. However, during the course of hearing, Assessee raised the said jurisdictional legal grounds [which were rejected by CIT(A)] by resorting to Rule 27 of the ITAT Rules, 1963. Only oral application was made in this respect.
ITAT held that Rule 27 cannot be resorted without making proper application for it.
[Rule 27: The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him.]
QUESTION BEFORE THE HON’BLE HIGH COURT :
What is the scope of Rule 27 of the ITAT Rules, 1963?
FINDINGS AND DECISION OF THE HON’BLE TRIBUNAL :
Hon’ble High Court held that :
a) Rule 27 does not mandate an application to be made in writing, hence oral application cannot be refused.
b) The word ‘thereon’ used in section 254 (1) implies that the tribunal has to confine itself to the ‘subject matter’ of appeal only. However, the ‘subject matter’ is comprehended so as to encompass the entire controversy between the parties which is sought to be got adjudicated upon by the Tribunal.
c) Rule 27 cannot to be applied narrowly. Assessee cannot be precluded to challenge that part of CIT(A) which is against him [even when the order of CIT(A) was ultimately in favour]. It cannot be said that by resorting to such grounds, the scope of ‘subject matter of appeal’ was being violated.
d) In case an assessee having succeeded before CIT (Appeals) but opts not to file cross objection even when an appeal has been preferred by the department, from that it cannot be inferred that the assessee has accepted that part of the order which was against him.
e) When order of the CIT(A) is at large before the Tribunal, and as the assessee had taken the jurisdictional legal ground before CIT(A), the respondent (here assessee) would be entitled to defend the order of the CIT(A) on all grounds including on those held against him. He can rely upon Rule 27 and advance his arguments, even though it had not filed cross objections against the findings which were against him.
Accordingly the matter was remanded back to ITAT for fresh adjudication.
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