Yes, if it is a question of law that can be decided on facts already on the record. Rule 11 of the Income-tax (Appellate Tribunal) Rules 1963 requires the Tribunal's leave for a ground not set forth in the memorandum of appeal, and NTPC holds that s.254 is wide enough for the Tribunal to decide a question of law raised for the first time before it. A defective s.274 notice is exactly that kind of point: it is decided by reading the notice, and the notice is already on the file.
**The rule.** Rule 11 reads: "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, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule", with a proviso that "the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground."
There are two separate powers in that sentence, and the Special Bench in DCIT v. Summit Securities Ltd. (ITAT Mumbai, 7 March 2012) separated them. The first limb is the appellant's: he needs leave to urge a ground he did not plead. The second limb is the Tribunal's own: in deciding the appeal it is not confined to the pleaded grounds at all, provided the affected party is heard. So an assessee who has not filed a formal application is not shut out; he is asking the Tribunal to exercise a power the rule already gives it.
**The authority.** National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC) is digested in one line: "S. 254(1): Appellate Tribunal – Powers – Tribunal has jurisdiction to decide a question of law raised for the first time before it." Section 254 is in the widest possible terms and contains nothing confining the Tribunal to the grounds urged below. The condition is that the question is one of law and that the facts it rests on are already on the record.
**The department's usual answer, and why it fails.** The department reaches for Goetze (India) Ltd. v. CIT, that a claim can only be made by a revised return. The Bombay High Court in CIT v. Pruthvi Brokers & Shareholders held that Goetze was confined to the power of the assessing authority and that the Supreme Court itself said the judgment does not impinge on the power of the Tribunal under s.254. An assessee is entitled to raise before the appellate authorities not merely additional legal submissions but additional claims. The Court also kept two things apart that the department runs together: the jurisdiction to entertain a new ground, and the discretion whether to admit it.
**The qualification.** The same itatonline digest records Ultratech Cement Ltd. v. ACIT (2017) 408 ITR 500 (Bom) as holding that while fresh grounds may be admitted, the necessary evidence must be on record and the assessee should justify why the ground was not raised earlier. That is the practical shape of the application: annex the document, show that nothing new has to be proved, and say plainly why the point was missed.
**Why a penalty-notice ground fits.** The ground is that the s.274 notice did not tell the assessee which limb was charged. Deciding it requires one document — the notice — which is on the assessment record, was served on the assessee, and was relied on by the officer to found jurisdiction to levy. No fresh evidence, no new factual enquiry, no prejudice to the Revenue that a hearing cannot cure. The same reasoning applies to a limitation ground under s.275, to the absence of a s.143(2) notice, and to a want-of-jurisdiction ground.
**The first appellate stage.** The equivalent power before the CIT(A) comes from Jute Corporation of India Ltd. v. CIT, where the Supreme Court held that the appellate authority's powers are co-terminous with the officer's and nothing in the Act restricts the right to raise an additional ground, provided it is raised bona fide and could not reasonably have been raised earlier. It is better to raise the point there — an existing entry in this library records that some benches decline to entertain the penalty-notice objection when it surfaces only on second appeal.
Old penalty appeals are frequently won on a point nobody argued below, because the printed-form defect was not noticed until the file was re-read for the Tribunal. If the additional ground cannot be got in, the appeal is fought on merits that may already have gone against the assessee at two levels. Knowing that the objection is jurisdiction-plus-discretion, not a bar, changes how the application is drafted: it is addressed to the Tribunal's discretion, not to its power.
How wide are the first appellate authority's powers when it disposes of an appeal?
The assessing officer accepted my method of accounting. Can the first appellate authority reject it for the first time in my own appeal and enhance the assessment?
The first appellate authority has enhanced my assessment using items the Assessing Officer never looked at. Can it do that, or has it gone beyond its jurisdiction?
Is payment of admitted tax under s.249(4) a condition that must be satisfied again when the appeal goes on to the Tribunal?
Can the CIT(A) use the enhancement power to tax a source of income the Assessing Officer never examined?
The Tribunal recalled its whole order on my miscellaneous application. Will that recall survive?
Can an appellate authority under the Income-tax Act throw out an appeal because the appellant did not turn up?
Can I argue a point in the High Court that was never taken before the Tribunal, if it arises on the facts the Tribunal found?
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