1. ' B.J. DIVAN, CJ.-- In this case, at the instance of the revenue, the following question has been referred to us for our opinion: "Whether, on the facts and in the circumstances of the case the Tribunal was right in law in directing the Appellate Assistant Commissioner to consider the claim of the assessee under section 80J which was not made before the Income-tax Officer?"
2. ' In our opinion, in order to bring out the real controversy in the matter and in order to see that the question is correctly related to the facts of the case, the question should be refrained and when refrained, the question will read as follows: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in directing the Appellate Assistant Commissioner to consider the claim of the assessee under section 80J which was not made either before the Income-tax Officer or before the Appellate Assistant Commissioner?"
3. ' We are concerned in this case with the assessment year 1967-68. The assessee came before the Tribunal with a grievance that though at the time of the arguments before the Appellate Assistant Commissioner the assessee had orally contended that relief under section 80J of the Income-tax Act, 1961, should have been granted, the Appellate Assistant Commissioner had not considered this submission made on behalf of the assessee. At the rime of the hearing before the Appellate Assistant Commissioner the assessee had orally prayed for relief under section 80J(3) and the Appellate Assistant Commissioner had orally agreed to admit the said further ground but actually when he came to pass the order, the Appellate Assistant Commissioner had not given any relief under section 80J(3). When we turn to the grounds of appeal before the Tribunal, we find that the grounds of appeal are in substance only two: (1) The Appellate Assistant Commissioner had erred in not considering and deciding the appellant's oral contention that it should have been allowed relief due to it under section 80J: (2) the appellant had no taxable income in the year under assessm ent and hence it could not claim carrying forward relief under section 84 of the Act.
4. However, a new section 80J [including subsection (3)] was introduced and enacted later on retrospectively, so that relief under section 80J could be carried forward. Therefore, at the time of the hearing of the appeal before the Appellate Assistant Commissioner, the assessee orally prayed for relief under section 80J(3). The Appellate Assistant Commissioner had orally agreed to admit the said further ground but had erred in not granting relief. He ought to have ordered it to be carried forward under section 80J(3). In its order the Tribunal points out that when the appeal was heard before the Tribunal, the learned departmental representative urged that the point did not arise out of the order of the Appellate Assistant Commissioner and that the Tribunal should not deal with the point. The Tribunal observed: " in our view, this is purely a legal matter and we are entitled to entertain this point even if it was raised for the first time before us....We also do not propose to enter into the controversy whether the point was raised before the Appellate Assistant Commissioner orally or not. We allow the assessee to raise this point as this is a legal point and direct the Appellate Assistant Commissioner to consider this aspect and pass his orders after giving an opportunity to the Income-tax Officer and the assessee to put up their cases. In view of this direction, the assessee's appeal will be treated as allowed".
5. ' The Tribunal has proceeded upon the footing that the assessee had not raised the point regarding section 80J before the Appellate Assistant Commissioner and it has not tried to find out whether in fact the assessee had orally argued the question of relief under section 80J at the time of hearing of the appeal before the Appellate Assistant Commissioner. The Tribunal was content to proceed upon the footing that the assessee had not in fact urged this point before the Appellate Assistant Commissioner and that it was for the first time that the question relating to relief under section 80J was being raised at the stage of the appeal before the Tribunal.
6. The question of the extent of the jurisdiction of the Tribunal in allowing the parties before it to raise points which were not raised before the departmental authorities or which are alleged not to have been raised before those authorities have been discussed in a series of decisions and we find that there are two decisions of the Supreme Court which deal directly with this point. In Hukumchand Mills Ltd. v. Commissioner of Income-tax.[1967] 63 ITR 232 (SC), the question has been considered.
7. The Supreme Court in that case was concerned with the provisions of section 33(4) of the Indian Income-tax Act, 1922. Ramaswa mi, J., delivering the judgment of the Supreme Court, has observed at page 236: "The powers of the Tribunal in dealing with appeals are expressed in section 33(4) of the Act in the widest possible terms. Section 33(3) of the Act states that 'an appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner...Section 33(4) reads as follows:
33. (4) The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner.
8. ' The word 'thereon' of course, restricts the jurisdiction of the Tribunal to the subject-matter of the appeal. The words 'pass such orders as the Tribunal thinks fit' include all the powers (except possibly the power of enhancement) which are conferred upon the Appellate Assistant Commissioner by section 31 of the Act. Consequently, the Tribunal has authority under this section to direct the Appellate Assistant Commissioner or the Income-tax Officer to hold a further enquiry and dispose of the case on the basis of such enquiry. Rule 12 of the Appellate Tribunal Rules, 1946, made under section 5A(8) of the Act provides as follows: ' 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: ' Provided 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.
9. ' Rule 27 states: ' The respondent, though he may not have appealed, may support the order of the Appellate Assistant Commissioner on any of the grounds decided against him.
10. ' Rule 28 is to the following effect: ' Where the Tribunal is of opinion that the case should be remanded, it may remand it to the Appellate Assistant Commissioner or the Income-tax Officer, with such directions as the Tribunal may think fit.'
11. ' In the case before the Supreme Court in Hukumchand Mills Ltd v. Commissioner of Income-tax [1967 63 ITR 232 (SC) the subject-matter of the appeal before the Tribunal was the question as to what should be the proper written down value of the buildings, machinery, etc., of the assessee for calculating the depreciation allowance under section 10(2) (vi) of the Act of 1922. It was certainly open to the department, in the appeal filed by the assessee before the Tribunal, to support the finding of the Appellate Assistant Commissioner with regard to the written down value on any of the grounds decided against it. Thus, in this decision of the Supreme Court, three distinct phrases, namely, "jurisdiction of the Tribunal", "power of the Tribunal" and "the grounds of appeal" have been used. The jurisdiction of the Tribunal, as observed by the Supreme Court, is restricted to the subject-matter of the appeal. In the exercise of that jurisdiction, the Tribunal can pass such orders as the Tribunal thinks fit and hence the Tribunal has all the powers except possibly the power of enhancement which are conferred upon the Appellate Assistant Commissioner under section 31 of the Act. All these powers can be exercised by the Tribunal only within the four corners of the jurisdiction which is restricted to the subject-matter of the appeal. While dealing with the subject- matter of the appeal in the exercise of the wide amplitude of its powers, the Tribunal may allow the party to take up a new ground of appeal provided ample opportunity is given to the other side to meet this new ground of appeal. But even the new ground of appeal must relate to the same subject-matter of appeal because the jurisdiction of the Tribunal is restricted to the subject-matter of the appeal. It must also be pointed out that so long as the subject-matter of the appeal remains the same and the relief which is sought before the Tribunal is on the same ground as before, a new section of the Act can be relied upon which was not relied upon before either the Income-tax Officer or the Appellate Assistant Commissioner. But that is a new ground of appeal which is a distinct thing from the subject-matter of the appeal or from the powers which the Tribunal is entitled to exercise while hearing the appeal before it. In our opinion, unless a clear distinction between these three concepts, namely, jurisdiction of the Tribunal which is restricted to the subject-matter of the appeal, the powers of the Tribunal which are very wide but which can only be exercised within the four corners of the jurisdiction enjoyed by the Tribunal and the grounds of appeal is borne in mind, a lot of unnecessary confusion is likely to arise.
12. ' In Commissioner of Income-tax v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710 (SC) the question before the Supreme Court was in connection with development rebate. The assessee, which carried on business of manufacture and sale of cotton yarn, spent Rs,93,215 for introduction of the "Casablanca conversion system" in its spinning plant. The assessee claimed development rebate on the ground that introduction of "Casablanca conversion system" involved installation of new machinery, and for the first time before the Appellate Tribunal claimed in the alternative that the amount laid out was in any event expenditure for current repairs allowable under section 10(2)(v) of the Indian Income-tax Act, 1922. The Tribunal inspected the factory, studied the working of the machinery and considered the literature of the manufacturers and held that though development rebate was not admissible the amount spent was admissible under section 10(2)(v) since as a result of the stress and strain of production over a long period there was need for change in the plant, and that the assessee had replaced old parts. One of the questions before the Supreme Court was whether the Tribunal had the jurisdiction to allow this plea about the sum of Rs,93,215 having been earlier claimed in respect of development rebate, being claimed now as business expenditure to be raised for the first time before the Tribunal and Shah, J., as he then was, delivering the judgment of the Supreme Court, observed (pages 712, 713): "By the first question the jurisdiction of the Tribunal to allow a plea inconsistent with the plea raised before the departmental authorities is canvassed. Under subsection (4) of section 33 of the Indian Income-tax Act, 1922, the Appellate Tribunal is competent to pass such orders on the appeal 'as it thinks fit '.There is nothing in the Income-tax Act which restricts the Tribunal to the determination of questions raised before the departmental authorities. All questions whether of law or of fact which relate to the assessm ent of the assessee may be raised before the Tribunal: If for reasons recorded by the departmental authorities in rejecting a contention raised by the assessee, grant of relief to him on another ground is justified, it would be open to the departmental authorities and the Tribunal, and indeed they would be under a duty, to grant that relief. The right of the assessee to relief is not restricted to the plea raised by him ' The subject-matter of the appeal in the present case was the right of the assessee to claim allowance for Rs,93,215. Whether the allowance was admissible under one head or the other of subsection (2) of section 10, the subject-matter for the appeal remained the same, and the Tribunal having held that the expenditure incurred fell within the terms of section 10(2)(v), though not under section 10(2)(vib), it had jurisdiction to admit that expenditure as a permissible allowance in the computation of the taxable income of the assessee".
13. ' If the first part of the passage which we have quoted above is read divorced from the second part, it might appear that the Supreme Court has interpreted the jurisdiction of the Tribunal to be unlimited. But, that is not so. Though the decision of the Hukumchand Mills Ltd.'s case [1967] 63 ITR 232 (SC) was not cited before the Supreme Court in Mahalakshmi Textile Mills Ltd.'s case [1967] 66 ITR 710 (SC) it is obvious from the second part of the passage quoted above that the Supreme Court was very much conscious of the restriction as to jurisdiction while dealing with the same case and it must not be forgotten that out of the three Judges who heard Mahalakshmi Textile Mills Ltd.'s case [1967] 66 ITR 710 (SC), Shah and Ramaswami, JJ. Were also members of the Bench which heard Hukumchand Mills Ltd.'s case [1967] 63 ITR 232 (SC). Under these circumstances, it is but obvious that being conscious of what had been observed in Hukumchand Mills Ltd.'s case [1967] 63 ITR 232 (SC) and in Mahalakshmi Textile Mills Ltd.'s case [1967] 66 ITR 710 (SC), the Supreme Court in the second part of the passage quoted above emphasized that the subject-matter had remained the same and the Tribunal had the jurisdiction to admit the expenditure as a permissible allowance which was in connection with the same subject-matter of the appeal. Therefore, the first part of the passage which is in very wide terms must be read in the context of the powers which the Tribunal could exercise within the four corners of the jurisdiction which is restricted to the subject-matter of the appeal. All that Shah, J. Is emphasizing in the first part of the passage quoted above is that within the four corners of the jurisdiction which is restricted to the subject-matter of the appeal, the Tribunal has very wide powers and even though a particular ground of relief relating to the same subject-matter might not have been raised at any earlier stage either before the Income-tax Officer or before the Appellate Assistant Commissioner, it can be raised for the first time at the stage of appeal before the Tribunal but it must be in connection with the subject- matter of the appeal, and that is why Shah, J. Emphasised at page 713: "If for reasons recorded by the departmental authorities in rejecting a contention raised by the assessee, grant of relief to him on another ground is justified, it would be open to the departmental authorities and the Tribunal, and indeed they would be under a duty, to grant that relief."
14. ' So, Mahalakshmi Textile Mills Ltd.'s case [1967] 66 ITR 710 (SC) cannot be read as holding that the Tribunal has unlimited jurisdiction to cover all possible points that may be urged before it. The power to deal with all questions of law or fact must be exercised within the four corners of the jurisdiction which is restricted to the subject-matter of the appeal.
15. ' It is in the light of this clear distinction between the subject-matter of the appeal, the powers which the Tribunal can exercise while exercising that jurisdiction and the grounds of appeal, that we must now read the different authorities of the different High Courts. In Commissioner of Income-tax v Karamchand Premchand P. Ltd. [1969] 74 ITR 254 (Guj), the facts were rather peculiar and it was in the light of the facts of that case that the questions relating to the scope and ambit of the jurisdiction of the Tribunal were considered by this High Court. At the stage of the proceedings before the Income-tax Officer in that particular case, the assessee made, inter alia, three claims from deduction: one was for depreciation in respect of the land on which stood the building of the assessee; the other was for development rebate in respect of certain machinery installed during the relevant accounting year and the third was for a sum of Rs, 25,920, being the aggregate amount of stamp duty, registration charges, lawyer's fees and other miscellaneous expenses incurred by the assessee in connection with the issue of debentures secured on the fixed assets of the assessee and issued to the Bank of India Ltd. To secure a loan borrowed for the purpose of the business of the assessee. Out of the three claims the first was rejected by the Income-tax Officer and the second was partially disallowed and so far as the third was concerned, it was wholly disallowed on the ground that it represented capital expenditure. The assessee being aggrieved by the order of assessm ent preferred an appeal to the Appellate Assistant Commissioner and in the memorandum of appeal, amongst other, two grounds were taken, one relating to the disallowance of the whole of the first claim and the other relating to the partial disallowance of the second claim and relief was sought that these two claims should be fully allowed as permissible deductions. The disallowance of the third claim was not challenged by the assessee in the memorandum of appeal nor did it form the subject-matter of any ground of appeal. No leave of the Appellate Assistant Commissioner was also sought to urge it as an additional ground of appeal. The result was that the Appellate Assistant Commissioner was not called upon to consider and decide whether the disallowance of the third claim was properly made by the Income-tax Officer and there was no decision of the Appellate Assistant Commissioner on the point. The Appellate Assistant Commissioner considered the other two grounds urged on behalf of the assessee and decided that the first claim was rightly rejected by the Income-tax Officer but the disallowance of the second was improper and it should be allowed as a permissible deduction. The assessee thereupon carried the matter in further appeal to the Tribunal. Only one ground of appeal was originally taken in the memorandum of appeal and that related to the disallowance of the first claim. But, before the appeal came on for hearing, a decision was given by the Supreme Court in India Cements Ltd. v. Commissioner of Income-tax [19661 60 1TR 52 (SC) to the effect that expenditure such as the one claimed by the assessee as forming the subject-matter of the third claim must be held to be expenditure incurred wholly and exclusively for the purpose of the assessee's business and as such allowable as a deduction under section 10(2)(xv) of the Indian Income-tax Act, 1922, corresponding to section 37 of the Income-tax Act, 1961. The assessee thereupon made an application to the Tribunal for raising an additional ground of appeal challenging the disallowance of the third claim and this application was filed before the actual date of hearing of appeal. When the appeal reached the stage of hearing, the first claim was not pressed by the assessee since it was already covered by a decision given in the meantime by the Supreme Court in Commissioner of Income-tax v. Alps Theatre [19671 65 ITR 377 (SC). The main and the only controversy between the parties, therefore, at the stage of the appeal before the Tribunal, centered round the third claim sought to be agitated by means of the additional ground and the question before the High Court was ultimately, whether the Tribunal had jurisdiction to allow this contention about the third claim to be raised, and the question which was referred to the High Court in Karamchand Premchand P.Ltd.'s case [19691 74 ITR 254 (Cluj) was: "Whether, on the facts and in the circumstances of the case, the Tribunal had jurisdiction to allow the assessee to raise the additional ground and to decide whether the assessee was entitled to a deduction of Rs,25,920 ?
16. ' Bhagwati, C.J., delivering the judgment of the High Court, observed at page 259: "What is the order which the Appellate Assistant Commissioner makes when he disposes of an appeal against an order of assessme nt ? Section 24( which provides for an appeal to the Appellate Assistant Commissioner against an order of assessment confers the right of appeal only on the assessee and not on the revenue and says that the assessee may appeal if he is aggrieved by the order of assessm ent and objects to the amount of income assessed or to the amount of tax determined under the order of assessment. Now, the process of assessment of the amount of income and determination of the amount of tax would ordinarily involve consideration of diverse items or sources of income and reaching of several decisions by the Income-tax Officer and the assessee who is aggrieved by an order of assessment may object to the amount of income assessed or to the amount of tax determined on one or more grounds directed against the decisions reached by the Income-tax Officer in the course of the assessment. The assessee may be satisfied with some decisions given by the Income-tax Officer and may be dissatisfied with others and to the extent to which he is dissatisfied, he may challenge such decisions by raising specific grounds of appeal and urge that the amount of income assessed or the amount of tax determined as a result of such decisions be either set aside or reduced. Where such an appeal is preferred, section 250, subsection (2), says that both the assessee and the Income-tax Officer shall have a right to be heard at the hearing of the appeal. Section 251 lays down the powers of the Appellate Assistant Commissioner in disposing of the appeal and subsection (1), clause (a), says that on an appeal against an order of assessment, the Appellate Assistant Commissioner may confirm, reduce, enhance or annul the assessment or he may set aside the assessment and refer the case back to the Income-tax Officer. The Explanation at the end of section 251 makes it clear that, in disposing of the appeal, the Appellate Assistant Commissioner may consider and decide any matter arising out of proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Appellate Assistant Commissioner by the assessee. The Explanation was not there in the old Act but even without The Explanation, the interpretation consistently placed by the High Courts on the corresponding provisions of the old Act was--Vide Narrondas Manordass v.Commissioner of Income-tax [1957] 31 ITR 909, 918 (Born) and this interpretation was confirmed by the Supreme Court in Commissioner of Income-tax v.
17. McMillan and Co. [1958] 33 TTR 182 (SC) and Commissioner of Income-tax v Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC) that once an appeal is preferred by an assessee, the powers of the Appellate Assistant Commissioner are not confined to a consideration of only those matters which are raised by the assessee in appeal but he may also consider and decide matters not raised in appeal but considered by the Income-tax Officer and determined in the course of the assessment. The Explanation gives statutory recognition to this interpretation and accords legislative approval to it.
18. The result is that if an assessee does not choose to appeal, the order of assessment becomes final subject to any power of revision which the Commissioner may have under section 263, but if, as observed by Chagla, C. J. In Narrondas' case [1967] 31 ITR 909: ...The assessm ent is opened up by the action of the assessee himself, then the powers conferred upon the Appellate Assistant Commissioner are much wider than the powers of an ordinary Court of appeal. The statute provides that once an assessment comes before the Appellate Assistant Commissioner, his competence is not restricted to examining those aspects of the assessment which are complained of by the assessee; his competence ranges over the whole assessment and it is open to him to correct the Income-tax Officer not only with regard to a matter raised by the assessee but also with regard to a matter which has been considered by the Income-tax Officer and determined in the course of the assessment'.
19. ' The powers of the Appellate Assistant Commissioner are not confined to the subject-matter of the appeal but extend to the subject-matter of the assessment. The entire assessment is thrown open before the Appellate Assistant Commissioner, and, so long as he does not travel outside the matters considered and determined by the Income-tax Officer, he can correct any decision of the Income-tax Officer in the course of the assessment even if the assessee is satisfied with it and has not challenged it in the appeal. But whatever be the points considered and determined by him-- whether raised originally in the memorandum of appeal or with leave granted under section 250, subsection (5) or considered suo motu--the Appellate Assistant Commissioner must set out in the order 'the points for determination the decision thereon and the reasons for the decision'--Vide section 250, subsection (5). The order of the Appellate Assistant Commissioner would thus consist of various decisions on matters which may be raised in appeal by the assessee or considered suo motu by the Appellate Assistant Commissioner and the effect of these decisions would be to confirm or reduce or enhance or annul or set aside the assessment as stated in subsection (1) clause (a) of section 251.
20. ' Turning now to section 253, which provides for an appeal to the Tribunal against an order passed by the Appellate Assistant Commissioner under section 250, we find that, unlike section 246, this section confers a right of appeal both on the asscssee and the revenue-Vide subsections (1) and
(2) and as appears clearly from the language of subsection (4) and particularly the words "the Income-tax Officer or the assessee may, notwithstanding that he may not have appealed against such order or any part thereof...File a memorandum of cross-objections ...Against any part of the order..." It postulates that in respect of the same order of the Appellate Assistant Commissioner, there may be an appeal by the assessee as to one part and an appeal by the revenue as to the other. The reason for this departure in the scheme is obvious. The order of the Appellate Assistant Commissioner, as pointed out above, would consist of various decisions on matters considered by him and out of these decisions, some may be against the assessee and some may be against the revenue. The assessee, if he does not accept the decisions which are against him, may prefer an appeal to the Tribunal against that part of the order of the Appellate Assistant Commissioner which comprises such decisions (vide subsection (1)) and the revenue also, similarly, may if it does not accept the decisions recorded against it, prefer an appeal to the Tribunal against that part of the order of the Appellate Assistant Commissioner which consists of such decisions (vide subsection (2)) Where the assessee or the revenue has preferred an appeal to the Tribunal against that part of the order of the Appellate Assistant Commissioner which consists of decisions recorded aginst him, the other party, if he has not already appealed, may file cross-objections against that part of the order of the Appellate Assistant Commissioner which consists of decisions with which he is dissatisfied (vide subsection (4)). The appeal by the assessee or by the revenue against any part of the order of the Appellate Assistant Commissioner is therefore really an appeal against the decisions of the Appellate Assistant Commissioner which are against him and by which he is aggrieved. It is therefore imperative that there must be a decision of the Appellate Assistant Commissioner by which the assessee or the revenue is agrieved before he can prefer an appeal against that part of the order of the Appellate Assistant Commissioner consisting of such decision. A fortiori. If a particular matter is not considered and decided by the Appellate Assistant Commissioner, and the decision on it does not form part of the order of the Appellate Assistant Commissioner there can be no appeal against it. This much was not disputed, and indeed could not be disputed. By the learned Advocate appearing on behalf of the assessee." (Emphasis supplied by us)
21. We have quoted in extenso from this judgment in Commissioner of Income-tax v. Karamchand Premchand P. Ltd. [19691 74 ITR 254 (Guj) to point out that this High Court was very much conscious of the distinction between the powers and jurisdiction of the Appellate Assistant Commissioner on the one hand and! The powers and jurisdiction of the Tribunal on the other while disposing of the appeals before those respective authorities. The jurisdiction of the Appellate Assistant Commissioner is with reference to the subject-matter of the appeal as well as to the subject- matter of the entire assessm ent whereas the jurisdiction of the Tribunal is restricted to the subject- matter of the appeal and the subject-matter of the appeal can only be the grievance against one or the other decisions of the Appellate Assistant Commissioner. If the Appellate Assistant Commissioner has not decided a point even though he was invited to do so, it can be said that by failing to decide it, impliedly he has given his decision and even that implied decision can be made the subject-matter of the appeal before the Tribunal but only the express decision of the Appellate Assistant Commissioner or the implied decision of the Appellate Assistant Commissioner can be made the subject-matter of the appeal before the Tribunal. If there is no such decision on any part of the assessm ent, namely, the express decision or implied decision, there cannot be any appeal to the Tribunal and this has been clearly emphasized by Bhagwati, C.J. In the passage that we have set out above. This High Court in Karamchand Premchand P. Ltd.'s case [1969]74 I T R 254 (Guj) held ultimately that the Tribunal was not entitled to allow the assessee to agitate the question under the guise of granting leave under rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963. If the matter had been the subject-matter of the appeal, it would have been open to the Tribunal to allow the assessee to raise a new ground of appeal but it must be with reference to the same subject- matter of the appeal and not with reference to a different subject-matter. The earlier decisions of the Supreme Court in Hukumchand Mills Ltd.'s case [1967] 63 I T R 232 (SC) and in Mahalakshmi Textile Mills Ltd.'s case [1967] 66 I T R 710 (SC) do not lay down anything contrary to what has been observed by this High Court in Karmachand Premchand P. Ltd.'s case [1969] 74 I T R 254 (Guj).
22. Indeed, in Karamchand Premchand P. Ltd.'s case [19691 74 I T R 254 (Guj) this High Court merely emphasised that the Tribunal cannot step outside the four corners of its jurisdiction and deal with a matter which is not the subject-matter of the appeal before it and this High Court has in clear details spelt out what can be the subject-matter of the appeal before the Tribunal, namely, any decision which may be either implied or express, given by the Appellate Assistant Commissioner and any one of those implied or express decisions of the Appellate Assistant Commissioner can become the subject-matter of the appeal and it is only the party who is aggrieved by one or the other of those decisions of the Appellate Assistant Commissioner, he is the revenue or be it the assessee, who can file the appeal and can agitate the matter before the Tribunal. But there must be a decision of the Appellate Assistant Commissioner being aggrieved by which the revenue or the assessee carried the matter in appeal to the Tribunal and it is this decision against which the revenue or the assessee bears a grievance or by which he feels aggrieved, that forms the subject- matter of the appeal before the Tribunal. If in any particular case, as happened in the case of Karamchand Prcmchand P.Ltd.'s case {1969] 74 I T R 254 (Guj), the Appellate Assistant Commissioner was never called upon to give his decision on a particular point, it cannot be said that the Appellate Assistant Commissioner had given a decision on that point and, therefore, it cannot be said that the assessee or the revenue was aggrieved by the decision of the Appellate Assistant Commissioner regarding that particular matter and if there was no grievance on the part of the appellant before the Tribunal regarding a particular subject-matter, it cannot be said that that particular item formed the subject-matter of the appeal before the Tribunal. One must keep in forefront the concept that the jurisdiction of the Tribunal is restricted to the subject-matter of the appeal. Karamchand Premchand P. Ltd.'s case [1969] 74 I T R 254 (Guj) merely illustrates and exemplifies what can happen if the question sought to be agitated before the Tribunl does not pertain to the subject-matter of the appeal before the Tribunal.
23. ' In Commissioner of Income-tax v. Gurjargravures P. Ltd. [1972] 84 I T R 723 (Guj), the question before this High Court was regarding the powers of the Appellate Assistant Commissioner and it was emphasised that where an assessee prefers an appeal against an order of assessment, the whole assessm ent order is thrown open before the Appellate Assistant Commissioner and he can interfere with any part of the assessm ent whether in favour of the assessee or against him. It was emphasized that the jurisdiction of the Appellate Assistant Commissioner is not confined to the subject-matter of the appeal but extends to the subject-matter of the assessment. It is true that, in that particular case the question involved was regarding the relief to be granted under section 84 of the Act of 1922 now replaced by section 80J of the Act and when the assessee claimed exemption of a portion of the profits brought to tax by the Income-tax Officer for the first time in an appeal to the Appellate Assistant Commissioner, it was held that as the Income-tax Officer had subjected to tax the portion of profit which was claimed to be exempt under section 84, it was open to the Appellate Assistant Commissioner to consider whether the assessment of this portion was right or wrong and hence he could examine the claim under section 84. Gurjargraures Pvt. Ltd.'s case [1972] 84 I T R 723 (Guj), therefore, which deals with the powers of the Appellate Assistant Commissioner is not of much assistance to us in the instant case. It may be pointed out that the relief which was not even pressed for before the Income-tax Officer was held to be within the jurisdiction of the Appellate Assistant Commissioner since it was part of the entire assessment proceedings with which the Appellate Assistant Commissioner had the jurisdiction to deal.
24. ' In Commissioner of Income-tax v. Sayaji Mills Ltd. [1974] 94 I T R 26 (Guj) again the question was of the powers of the Appellate Assistant Commissioner to deal with a claim of the assessee which was not raised before the Income-tax Officer and it was held that all questions, whether of law or of fact, which relate to the assessm ent of the assessee, may ordinarily be allowed to be raised by him in appeal even though not raised before the Income-tax Officer, if grant of relief would be available on the determination of such question. The Appellate Assistant Commissioner had been requested to permit the assessee to contend that in the assessment of the relevant years, the profits realized on the sale of machinery in the relevant previous years were not taxable because the business was not in existence at any time during the relevant previous years and this point which was not allowed to be raised by the Appellate Assistant Commissioner formed the subject-matter of the appeal before the Tribunal. The decision in Hukumchand Mills Ltd.'s case [1967] 63 I T R 232 (SC) was considered by the Division Bench of this Court in Sayaji Mills Ltd.'s case [1974] 94 I T R 26 (Guj) and P.D. Desai J., delivering the judgment of the Court, has observed at page 33: "It would appear from the provisions of section 33(4), as construed by the Supreme Court, that the legislature has conferred upon the Appellate Tribunal wide powers in dealing with appeals preferred to it. The jurisdiction of the Tribunal is undoubtedly restricted to the subject-matter of the appeal but once it is shown that a particular claim or contention was the subject-matter of the appeal before the Tribunal, the law authorises the Tribunal to pass such orders in relation to such claim or contention as it thinks fit."
25. ' This precisely brings out the distinction between jurisdiction on the one hand and the powers of the Tribunal in the exercise of the jurisdiction on the other.
26. ' In view of what we have discussed above, it cannot be said that what has been held by this High Court in Karamchand Premchand P. Ltd.'s case [1969] 74 I T R 254 (Guj) is in any way in conflict with the decisions of the Supreme Court in Hukumchand Mills Ltd.'s case [1967] 63 I T R 232 (SC) and Mahalakshmi Textile Mills Ltd.'s case [1967] 66 I T R 710 (SC). This High Courts has merely applied one aspect of the principle when it found that the particular claim or contention which was sought to be raised before the Tribunal did not form part of the subject-matter of the appeal before the Tribunal. By analysing the different sections pertaining to the appeal, the High Court has merely pointed out what can possibley be the subject-matter of the appeal before the Tribunal.
27. ' Our attention has been drawn to the following decisions of the different High Courts pertaining to the powers of the Tribunal and the question of the powers of the Tribunal and the jurisdiction of the Tribunal: Oriental Building and Furnishing Company v. Commissioner of Income-tax [1952] 21 I T R 105 (Punj) was decided by the Punjab High Court and it was held that the Tribunal's power of dealing with an order passed by an Appellate Assistant Commissioner is plenary and has been expressed in section 33 (4) of the Indian Income-tax Act, 1922, as widely as can be conceived. In Ramgopal Ganpatrai & Sons v. Commissioner of Excess Profits Tax [1953] 24 I T R 362 (Born) the Bombay High Court dealt with the question of the powers of the appellate authority. The question was not raised before the assessing officer and was not stated in the grounds of appeal and the question was whether it can be considered by the Appellate Assistant Commissioner and the Tribunal. We have pointed out above that the entire subject-matter of assessment is open before the Appellate Assistant Commissioner and if the point was raised before the Appellate Assistant Commissioner and was decided by him one way or the other, it can certainly be raised before the Tribunal. In Commissioner of Income-tax v. Beach Candy Swimming Bath Trust [1955] 27 ITR 279 (Born), what was sought to be done was that claim under a new provision of law was sought to be put forward before the Appellate Tribunal for the first time and it was not a question of something which was not the subject-matter of the appeal being raised before the Tribunal. In Ncw India Life Assurance Co. v. Commissioner of Income-tax [1957] 31 ITR 844 f Born.) the question was of a new ground of appeal and there was no question of anything being urged before the Tribunal which was not the subject-matter of the appeal. In Commissioner of Income-tax v. Hazarimal Naji & Co.
28. [1962] 46 ITR 1168 (Bom), a new contention of law which was purely of law was raised for the first time before the Appellate Tribunal and the facts as found before the Income-tax Officer as well as before the Appellate Assistant Commissioner were not in dispute. Though this legal argument was not urged before either the Appellate Assistant Commissioner or the Income-tax Officer, it was allowed to be urged before the Tribunal, and the Bombe/ High Court held that this point of law arising on the facts as found could be raised before the Tribunal and it was within the jurisdiction of the appellate powers of the Tribunal to permit the party to raise the question which it sought to raise for the first time before the Tribunal. Therefore, this case merely illustrates that the subject- matter of the appeal remaining undisturbed, it is open to a party to support its contention by a new legal argument altogether though such a legal argument was not urged either before the Income- tax Officer or before the Appellate Assistant Commissioner.
29. ' In Beharilal Ramcharan Cotton Mills Ltd. v. Commissioner of Income-tax [1966] 62 ITR 212 (Born), the claim for depreciation before the Income-tax Officer and the Appellate Assistant Commissioner was based on clause (via) of subsection (2) of section 10 but in the grounds of appeal to the Appellate Tribunal, it was sought to be based on an alternative claim that on the materials on record, the assessec was entitled to depreciation under section 12(3) and it was held that no new case was being set up but only some provision of law was sought to be called in aid to support the claim for depreciation on the same set of facts and it was held by the High Court that the Tribunal was not justified in not considering the case of the assessce under section 12(3) of the Act on the material already on record. Hence, if the materials are on record and on those materials on record a new argument or contention of law is sought to be urged, the contention cannot be rejected by the Tribunal on the ground that it is a new contention.
30. ' In J.S. Parkar v. V.B. Palckar [1974] 94 ITR 616 (Born), the matter came up for final hearing before Tulzapurkar J. On a difference of opinion between Deshpandc and Mukhi, JJ. Tulzapurkar, J.
31. Ultimately agreed with the view of Deshpande J. But in his judgment Mukhi, J. Has dealt with the question of the powers of the Tribunal in allowing new points to be raised and Mukhi, J. Found that the point which was sought to be raised before the Tribunal was not being raised for the first time and he also held that the point also could be considered to be a pure question of law or a plea which could be considered on the evidence already on the record, and he has considered the powers of the Tribunal from this angle.
32. ' In Commissioner of Income-tax v. Krishna Mining Co. [1977] 107 ITR 702 (AP) the Andhra Pradesh High Court has held (pp. 707-708): "Although the powers of the Tribunal are expressed in very wide language, the word 'thereon' restricts the use of such wide powers of the Tribunal to the subject-matter of the appeal the Tribunal's powers arc limited to passing such orders as it thinks fit 'on the appeal'. In other words, the powers of the Tribunal are limited to the subject-matter of the appeal....It would not be permissible for the Tribunal to adjudicate or give a finding on a question which was not agitated or in regard to which no relief was claimed in the lower Tribunals or which was not in dispute and which does not form the subject-matter of the appeal...The Tribunal's decision must be confined as in the case of other judicial or quasi-judicial tribunals, to the questions brought before it on the appeal, and it must not travel outside it."
33. In our opinion, the legal position has to be considered ultimately in the light of the decisions in Hukumchand Mills Ltd.'s case [1967] 63 I T R 232 (SC) and Mahalakshmi Textile Mills Ltd.'s case [1967] 661 T R 710 (SC). First, it must be found out what is the subject-matter of the appeal and that can be determined only by finding out what the Appellate Assistant Commissioner expressly or impliedly decided. We must emphasize again that by implied decision, we mean that though a point might have been raised before the Appellate Assistant Commissioner, in his final order the Appellate Assistant Commissioner might not have dealt with that point and thereby impliedly rejected it. That is an implied decision of the Appellate Assistant Commissioner and a party may be aggrieved by an express decision of the Appellate Assistant Commissioner or by an implied decision of the Appellate Assistant Commissioner. The subject-matter of the appeal before the Tribunal can only be the decision express or implied of the Appellate Assistant Commissioner and the jurisdiction of the Tribunal is restricted to the subject-matter of the appeal. Once the subject-matter of the appeal is determined, the Tribunal has very wide powers to deal with all questions of fact and law pertaining to that subject-matter of appeal and it can allow a new question of law to be raised in support of the same claim for relief. On the facts found, if a new aspect of law can be applied, it can allow it to be urged even though that aspect of the law was not urged either before the Income-tax Officer or the Appellate Assistant Commissioner. The Tribunal is not restricted to the very grounds of appeal on which originally the decision of the Appellate Assistant Commissioner was sought to be challenged when the appeal was filed. It has wide powers to allow the party to add to or alter the grounds of appeal subject, of course, to the opportunity being given to the other side of being heard on this new ground of appeal. These are the restrictions and limitations within which the Appellate Tribunal can function and can exercise its jurisdiction but it must be emphasized that the jurisdiction of the Tribunal which is restricted to the subject-matter of the appeal must not be confused with the powers of the Tribunal to deal with an appeal within the four corners of its jurisdiction. The Tribunal cannot transgress the limits of that jurisdiction even though, in the exercise of that juridiction, its powers are plenary and very wide.
34. ' In the instant case we find that the grievance of the assessee before the Tribunal was that, though the question of relief under sections 80J and 80J (3) was orally urged before the Appellate Assistant Commissioner in the course of arguments, the Appellate Assistant Commissioner in his order had not dealt with this point and had not granted any relief. If in fact such a contention was orally urged, the Tribunal, in the first instance, should have found out whether factually the ground of appeal before it was correct or not namely, whether such an oral contention had or had not been raised before the Appellate Assistant Commissioner. If such oral contention had been raised before the Appellate Assistant Commissioner, then the grievance of the assessee that the Appellate Assistant Commissioner had not dealt with this contention orally urged before the Appellate Assistant Commissioner at the time of the appeal formed the subject-matter of the appeal before the Tribunal and the Tribunal had the jurisdiction to deal with the question. In the exercise of that jurisdiction it was open to the Tribunal to remand the matter back either to the Income-tax Officer or to the Appellate Assistant Commissioner to ascertain the facts regarding this claim for relief under section 80J. The record of the Tribunal need not show and is not likely to contain whether in fact this contention was orally urged before the Appellate Assistant Commissioner by the assessee. In our opinion, therefore, the Tribunal should first ascertain for itself whether such a contention had in fact been urged before the Appellate Assistant Commissioner. If it comes to the conclusion that it was not urged by the assessee before the Appellate Assistant Commissioner, then the grievance that the Appellate Assistant Commissioner did not take that contention regarding section 80J into account cannot form the subject-matter of the appeal before the Tribunal and it is not open to the Tribunal to allow the assessee to raise the same plea before the Tribunal for the first time.
35. ' In view of the facts of the case, two courses are open to us; one is to call for a supplementary statement of the case from the Tribunal and the other is to leave the Tribunal to take appropriate steps to adjust its decision under section 260 (1) in the light of the answer of this Court. If we direct the Tribunal to submit a supplementary statement of the case, the Tribunal will, according to the decisions of the Supreme Court in New Jahangir Vakil Mills Ltd. v. Commissioner of Income-tax [1959] 37 I T R 11 (SC), Pelted Turkey Red Dye Works Co. Ltd. v. Commissioner of Income-tax [1963] 48 I T R (SC) 92 and Keshav Mills Co. Ltd. v. Commissioner of Income Tax [1965] 56 I T R 365 (SC), be restricted to the evidence on the record and may not be entitled to take additional evidence. That may result in injustice. In the circumstances, we think it appropriate to decline to answer the question on the ground that the Tribunal has failed to consider and decide the question whether the point regarding relief under section 80J was urged before the Appellate Assistant Commissioner or not and it will be open to the Tribunal to dispose of the appeal under section 260 subsection (1) of the Income-tax Act, in the light of the observations made by this Court after determining the question which ought to have been decided first. There will be no order as to costs of this reference. Appendix [In the Andhra Pradesh High Court] Commissioner of Income-tax v. Krishna Mining Co.
36. Copal Rao Ekbote, C.J. And Channakesava Raedy, J. December 20, 1972. Case Referred No, 15 of 1971.
37. ' GOPAL RAO EKBOTE, C.J.--The following two questions have been referred to us by the Income-tax Appellate Tribunal, Hyderabad: (1). Whether, on the facts and in the circumstances of the case, the method of revaluation of closing stock adopted by the Appellate Tribunal was a valid one?
38. (2). If the answer to question No,1 is in the affirmative, whether the relief in revaluation of stock should be restricted to the actual addition to the closing stock made by the Income-tax Officer or could exceed the same?" The assessee is a firm carrying on its business in mica mining. For the assessm ent year 1960-61, the closing stock valued by the assessee was found by the Income-tax Officer to be incorrect. The closing stock consisted of three items, crude mica, cut mica and waste rounds. The assessee valued cut mica and waste rounds at an average rate of Rs,1. 01 per pound.
39. ' At the close of the accounting year, i.e,, 31st March, 1960 the assessee's stock comprised of the following: Pounds (1). Crude mica 4,12,656 (2). Cut mica including splitting1,46,534 (3). Waste rounds 1,98,648 ' The total quantity of crude mica processed in that year was 25,84,429 pounds.
40. 'The said crude mica, when processed, yielded during the year: pounds Cut mica 2,49,398 Splitting 2,105 Waste-rounds5,33,085 Total 7,84,588 ' The Income-tax Officer, however, thought that the method adopted by the assessee does not bring out the true cost of cut mica. His Opinion was that the only end product of crude mica is cut mica alone. The waste rounds being of inferior quality had to be valued on the basis of the wages paid at the rate of 22 paise per lb. For picking them up from the waste scrap and not at the rate of cut mica. He thus divided the total cost of mining and processing with the cut mica produced in that year and arrived at an average cost of Rs,6. 62 per lb. Of cut mica. He, however, took into account the average market rate as it was less than the average cost of production and therefore, calculated the closing stock at the rate of Rs,5.36, which was the market rate. His valuation was as under: Rs.
41. (1). Crude mica 4,12,656 lbs. at 40 paise per pound 1,85,695 (2). Cut mica and splittings at the averge sale price of Rs.5. 36 per lb. for 1, 46,534 lbs7,85,422 (3). Waste rounds 1,98,6.18 at 22 paise per pound 43,702 Total value 10,4,819 ' He therefore, added, a further sum of Rs,4,80,490 to the value of the closing stock as the assessec had put.
42. ' The Income-tax Officer, consequently, had to revalue the opening stock on the same lines. He raised the value of the opening stock to Rs,7,90,489 in place of Rs,4,09,983 as was valued by the assessee.
43. ' As a result of these two valuations, he made an addition of Rs,99,984 to the under-valuation of the closing stock made by the assessee. The assessee's appeal to the Appellate Assistant Commissioner was substantially rejected.
44. ' On further appeal by the assessee the Tribunal reached the conclusion that the final products of crude mica are cut mica, splitting and waste rounds only. The quality of waste mica according to the Tribunal, cannot be taken into consideration for determining the cost of the end-products.
45. Thus, the cost of crude mica together with wages and expenditure in processing, was declared to be the cost of final products. The Tribunal, therefore, rejecting the computation made by the Income-tax Officer as well as made by the assessee valued the crude mica which was produced in the relevant year at 23,87,361 lbs. At 45 paise per lb. At Rs, 10,63,707.
46. ' Since during the relevant year crude mica to the extent of Rs,25,84,429 lbs. Was utilized its cost was arrived at 45 paise and that was declared to be the cost of the raw material. To this cost factory expenses amounting to Rs, 4,42,465 were added. The total cost thus arrived at was divided by the quantity of the end-products, that is, 7,84,483 lbs. The unit cost of the end product was thus arrived at for the year 1959-60 at Rs,l. 49 and for 1960-61 at Rs,1.89.
47. ' The opening and closing stocks were, therefore, valued accordingly and the Tribunal reached the conclusion. That, instead of addition of Rs,99,984 being added as was done by the Income-tax Officer, according to their calculation, a sum of Rs,10,644 alone has to be added. The appeal was, accordingly, allowed in part.
48. ' The assesses, thereafter, filed Miscellaneous Application No,13 of 196970. The Tribunal, by its order dated 12th May, 1970, modified its earlier order as it reached the conclusion that there was a mistake in calculating the figures.
49. ' Before the Tribunal three points were raised in the said petition. The first was that instead of Rs,1'.49 per unit, Rs,1'.75 per unit should have been calculated. The mistake occurred because the total quantity of end-products was not accurately kept in view. The second point was that the valuation of the closing stock in regard to cut mica should have been higher than the waste rounds. The third question was that the extent of crude and cut mica was improperly estimated.
50. ' The Tribunal agreed with the first contention. After calculating the figures accurately it reached the conclusion that there was arithmetical mistake and, therefore, corrected it. The Tribunal said: "Making the above alterations the differences in closing and opening stocks would be Rs,3,02,908 and Rs,3,86,977, respectively. The above computation will result in a reduction of profit of Rs,83,169 instead of an addition."
51. ' The Tribunal, however, did not agree with the contention of the assessee that the above said amount of profit, therefore, should be deducted from the total amount of profit. It thought that the matter on appeal before it related only to the addition of Rs,99,984 and it was not competent to go further into the matter and give a greater relief to the assessee than it had asked for. The Tribunal, therefore, deleted the entire addition of Rs,99,984 which arose because of the mistake in calculation, and, therefore, directed the deduction under section 35 (2) of the Act.
52. ' The first question referred to us calls for an answer regarding the method adopted by the Tribunal.
53. We have already seen that the Tribunal disagreeing with the lower Tribunals treated crude mica separately and cut mica, splittings and waste rounds together. The cost of these two was worked out separately. This method is objected to by the department on the ground that the method adopted by the Income-tax Officer was more correct and should have been sustained by the Tribunal. In order to appreciate this contention, one has to find out what is really the end product of crude mica.
54. ' Now, mica mining and processing is an important industry in India. Mica is worked extensively in Bihar, Rajasthan and Andhra Pradesh. It is a thriving business in Andhra Pradesh. The Andhra Pradesh mica is greenish in colour, clear and comparatively free from inclusions like Bihar mica.
55. Mica is produced mainly in Nellore District in Andhra Pradesh. Nellore mica is of greenish color, though ruby quality mica is also obtained from a few mines.
56. ' There are a large number of mica dealers whose main business is the purchase of mine crude mica and process it into block, splitting, etc. The petitioner is one such dealer.
57. ' Mica is invaluable in the electrical industry because of its unique combination of physical, chemical and thermal property, low power loss factor, dielectric constant and dielectric strength.
58. Sheet mica is used in a number of electrical and electronic appliances in different shapes and sizes.
59. ' The quality of mica for commercial purposes depends largely on the amount of staining, air- inclusions, the degree of flatness and the color.
60. ' Prospecting of mica is still a matter of trial and error as no scientific method has so far been evolved for determining with certainty the occurrence of paying mica pegmatite.
61. ' Accordingly, mines are developed following the veins. The room and pillar method is adopted in mining.
62. ' The mica obtained from the mine is called "crude mica". It requires a little dressing to remove associated pegmatite dirt as well as defective portions such as buckled, wrinkled and wavy mica.
63. They are rifted away with sickle.
64. ' Book mica split into a size is called "block mica".
65. ' Block mica split into thin films of a given thickness is called "micafilm" and when they are less than a given thickness they arc called "splittings".
66. ' The labourers engaged in mica mines and factories where mica is hand-dressed are experts in dressing the crude mica into block, films and splitting. They do it by visual aid only.
67. ' During the course of processing considerable portion of mica goes waste. It is termed as "scrap mica". The ratio of scrap mica to crude may vary from 60 to over 80 per cent depending on the defective portion in the crude mica.
68. ' For commercial purposes, mica is graded according to the quality. Indian Standards Institution has issued two 'specifications for grading and classifying of muscovite mica. The mica production is accordingly graded broadly into, (1) sheet mica which includes block, films and splitting, and (2) waste or scrap mica comprising the bulk of the total output. In India waste or scrap mica is mainly of muscovite variety obtained from mining, grading and trimming the sheet mica and is known in the trade as "mica scrap" or "factory scrap'. Scrap is thus a mica by-product obtained in the course of processing mica.
69. ' It is quite relevant to note that although "rounds" are not expressly mentioned above, it was not doubted that keeping in view the spots, the round cuttings from crude mica is called "rounds". The rest of it is waste or scrap. These rounds admittedly are not just picked up from the scrap but are cut by the labourer from the crude mica."Rounds" thus cannot be termed as waste or scrap. They are also part of the end product although their cost may be less than the cost of cut mica.
70. ' What follows from what is stated above is that the end product of crude mica is sheet mica which term includes block, films, splitting and rounds.
71. ' The result, therefore is that the Tribunal was right in valuing the entire quantity of crude mica which went into processing. The Tribunal was also correct in holding that the end-product of crude mica is not only cut mica but also splittings and rounds and has rightly valued it bearing in mind the expenditure incurred on them on mining as well as processing. The average rate per unit arrived at by the Tribunal could not, in the light of above, be disputed before us. The Tribunal also was right in excluding the value of the waste or scrap mica left after processing the crude mica from valuing the closing stock. The method thus adopted by the Tribunal in determining the valuation of closing stock and in turn opening stock is, in our judgment, quite correct and unassailable.
72. ' We then turn to the second question. We have already referred to the facts relevant to the question. It would be plain that the answer to this question depends upon determining the scope of the appeal before the Tribunal.
73. ' Since the present case is governed by the Act of 1922, we have to consider section 33 of that Act.
74. The language of section 33 (4) clearly indicates that the Appellate Tribunal may or can pass orders "thereon" on appeal "as it thinks fit". Although the powers of the Tribunal are thus expressed in very wide language, the word "thereon" restricts the use of such wide powers of the Tribunal to the subject-matter of the appeal. What plainly follows is that the Tribunal's powers are limited to passing such orders as it thinks fit "on the appeal". In other words, the powers of the Tribunal are limited to the subject-matter of the appeal.
75. ' The Act has thus left to the parties going up as appellants before the Tribunal to choose and set the scope of their appeal by raising questions arising out of the relevant proceeding. They can limit their attack on the determination of the first appellate authority and seek an intervention of the Tribunal only to the extent they consider necessary for getting the relief they intend to claim from the Tribunal. They are not, however, permitted to widen the scope of the proceedings determined by the Income-tax Officer or the first appellate authority. Within the outer limit of those proceedings they are free to ask for the necessary relief thus limiting the subject-matter and ultimately the scope of the appeal. It is plain that once these limits are set, the Tribunal can deal only with that part of the order of the lower Tribunal which has been made the subject-matter of the appeal before the Tribunal. It would not be permissible for the Tribunal to adjudicate or give a finding on a question which was not agitated or in regard to which no relief was claimed in the lower Tribunals or which was not in dispute and which does not form the subject-matter of the appeal. It is thus clear that the Tribunal has no jurisdiction to find its decision on a question which was not the subject of dispute at any stage of the proceedings and is not the subject-matter of the appeal. It has no power to enlarge the scope of the proceedings or that of the appeal before it by permitting the parties or any one of them to ask for a relief which was never the subject-matter in those proceedings or of the appeal.
76. ' This is the result produced by a reading of section 35 read with rules 11 and 27 of the Income-tax (Appellate Tribunal) Rules, 1963. We are, therefore, of the clear opinion that these provisions do not permit the Tribunal to travel beyond the scope of the appeal in order to decide questions raised by the assessee subsequently.
77. ' The grants of any such relief cannot be justified on the ground that section 33 (4) of the Act enables the Tribunal to make any order that it thinks fit. We are not inclined to take any such view of that subsection. Plainly, some limit, apart' from the limit which the word "thereon" puts upon it, must be placed upon the generality of the words used. No one can suppose that the legislature intended to create a dictatorship in the Tribunal, if and whenever an appeal happened to be brought before it under this section. It is equally incredible that the subsection should have been intended to give the Tribunal power to make any order it thinks fit relating to the assessment or transactions concerning it in general, or even in a case brought before it in particular, without any regard to the subject-matter of the appeal. The subsection, after all, is not dealing with the powers of the Appellate Tribunal as such. It is dealing with its powers as an Appellate Tribunal exercising quasi-judicial functions and the order which the Tribunal may make as such. Hence, the Tribunal's decisions must be confined, as in the case of other judicial or quasi-judicial Tribunals, to the questions brought before it on the appeal, and it must not travel outside it.
78. ' It is true that the powers of rectification bestowed on the Commissioner, Income-tax Officer and the Appellate Assistant Commissioner are extended by section 35 (2) to the Appellate Tribunal. But this power is exercisable only when there is a mistake in the judgment of the Tribunal. It is of course plain that after the mistake is thus corrected, the Tribunal will have the ancillary power to pass all consequential orders. But this should not be understood to extend the scope of the appeal in disposing of which there appeared some mistake. The error sought to be rectified, through an application under that section, should not he as a result of any fault of the party applying or the conduct of the appeal proceedings, but should be one attributable entirely to the Tribunal in working out correctly the arithmetic involved in the case. Section 35 (2) itself sets the limit to the exercise of jurisdiction in that behalf. It does not enable an order to be revised or reviewed but permits only to correct such error which is apparent on the face of the record. The order would be amended to that extent. It is obvious that any fresh relief to which the applicant may become entitled as a result of correction can be allowed as a consequential order if and only if it is within the scope of the appeal itself. If the relief now claimed as a result of the correction was not asked either before the lower Tribunals or even before the Appellate Tribunal it is evident that the Tribunal cannot give that relief. When the Appellate Tribunal had no jurisdiction to grant the relief originally because it would be beyond the scope of the appeal, it cannot grant it as a result of correction of the material error. What the Tribunal cannot do directly, it would not be able to do indirectly. Since power to review its judgment does not exist, the Tribunal cannot exercise that power. And in any case that power also, if available, would be again limited to the subject-matter of the appeal. Since we arc of the view, as we will explain immediately, that the relief now claimed, in view of the correction of the error by the Tribunal not being the subject-matter of the appeal, no relief could have been granted to the assessee either in the appeal itself or in a proceeding under section 35 (2).
79. ' That takes us to the consideration of the question as to the scope of the appeal before the Tribunal. We have to find out what was the subject-matter of the appeal. We have gone through the grounds of appeal. The whole attack on the order of the Appellate Assistant Commissioner was concentrated on the method of valuation of the closing stock. The valuation alone was attacked.
80. The second question was with regard to "rounds". The relief claimed was as follows: "The Tribunal may be pleased to direct the Income-tax Officer to delete the addition of Rs,99,984 from the income assessed for this year and reduce the tax accordingly.
81. ' It would immediately be seen that the purpose of attacking the method of valuation and the valuation was to get the relief of deleting the addition made by the Income-tax Officer of Rs,99,984 and in consequence reduce the tax. It was never the case of the assessee that he is entitled to a further deduction of profit of Rs,83,169. No question regarding this was even agitated either before the Income-tax Officer or before the Appellate Assistant Commissioner or even before the Tribunal.
82. It was not the subject-matter of the appeal and the Tribunal, consequently, had no jurisdiction to award any relief not claimed by the assessee in that regard. We agree with the Tribunal's view that the matter before the Tribunal related only to the addition of a sum of Rs,99,984 made by the Income-tax Officer which was completely deducted on evaluation of the stock. It was not competent to go further into the matter and give a greater relief than what was asked for by the assessee in its appeal.
83. ' We would, accordingly, answer the first question in the affirmative and in favour of the assess& and against the department. We answer the second question as above in favour of the department and against the assessee.
84. ' We leave the parties to bear their own costs. Advocate's fee Rs,250