Can New Grounds Be Taken before ITAT without it being there before CIT (Appeal)?

 

One of the most common doubts among taxpayers and professionals is whether new grounds can be raised for the first time before the Income Tax Appellate Tribunal (ITAT), even if they were never argued before the CIT(A). The short answer is YES, and the law on this point is not only clear but heavily in favour of the taxpayer. Let’s break it down in simple and practical terms.

1.  ITAT Has Wide Powers: Rule 11 of ITAT Rules Makes It Clear
Section 254 of the Income Tax Act gives ITAT extremely wide appellate powers. Reinforcing this, Rule 11 of the ITAT Rules, 1963expressly permits filing additional grounds. The rule states: “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…”. In simple words, you canraise new grounds; the Tribunal’s permission is required, but such permission is almost always granted when the ground is legal or touches the foundation of the assessment.

2.  Do You Need a Separate Application for Additional Grounds?
Not necessarily. Most practitioners do not file any separate application at all—because you already have two convenient options:

Option A: Mention the new grounds directly in Form No. 36
This is the most accepted and hassle-free practice. If the ground is already part of the Form 36 filed before the ITAT, Tribunals typically treat that as an implicit requestfor admission. No separate application is required. This works best when the new ground is:
•  legal in nature
•  related to jurisdiction
•  supported by facts already available on record
•  not requiring additional evidence

Option B: File a short application (rarely needed)
A small one-paragraph request may be made only when the new ground introduces fresh facts or new evidence. Even then, a simple oral request at the time of hearing is enough. A standard prayer looks like: “The appellant respectfully prays for admission of the additional ground, which is purely legal and does not require investigation of any new facts.”

3.  Supreme Court’s Landmark Support: NTPC & Jute Corporation
Two major Supreme Court rulings settle the controversy once and for all:
NTPC Ltd. v. CIT (1998): ITAT can admit new legal grounds even if not raised previously, as long as they arise from facts already on record.

Jute Corporation of India (SC): Additional grounds going to the root of the matter must be admitted, even at the appellate stage.
These decisions empower ITAT to do “complete justice” in every case.

4.  Practical Reality at ITAT Benches Across India
On the ground, ITAT benches routinely admit additional grounds when they challenge:
•  the validity of additions
•  lack of jurisdiction
•  wrong sections invoked (e.g., S.68 vs. S.145(3))
•  denial of natural justice
•  “without prejudice” alternative claims
In your case too, grounds such as:
•  Section 68 cannot apply when books are rejected
•  Best judgement assessment must be under Section 144
•  Cash sales recorded in books cannot be treated as unexplained cash credit
•  CIT(A)’s approach is contrary to law
are all pure legal grounds, fully admissible, and will be accepted without hesitation.

Final Takeaway:
•  Can new grounds be taken before ITAT? YES.
•  Are they allowed even if not raised before CIT(A)? YES.
•  Is a separate application required? Usually NO.
•  Legal grounds, jurisdictional grounds, and issues arising from existing facts are always admissible.
•  ITAT’s wide powers under Section 254 and Rule 11, plus Supreme Court judgments (NTPC, Jute Corporation), strongly support admission of new grounds.
•  Filing them directly in Form 36 is the simplest and most effective method.