Often assesses are found to have been making alternative pleas in the course of assessment proceedings or even before the first appellate authorities. This kind of approach is disastrous and always weaken their main ground/plea and therefore they have to content themselves with the relief as per alternative or many a times the revenue authorities decline the relief altogether. Perhaps the reason behind adopting such strategy is to safeguard their interest in as much as the 2nd or 3rd appellate authorities may decline to admit such pleas in the absence of specific claims before the assessing authorities. But this is not true and purely a farce assumption.
In the case of Additional Commissioner of Income-tax Vs. Mohan Engineering Co. (151ITR571) the main question was whether the assessee having failed to establish his initial plea could fall back on an alternative plea. In the instant case, the initial plea, as referred to above, in order to explain the cash credit entry (ies) of Rs. 28,000, was not accepted by the Revenue authorities. The assessee before the AAC took an alternative plea. The senior standing counsel for the Department submitted that the initial plea taken by the assessee before the ITO having been found to be incorrect, the assessee, in law, could not take an alternative plea to explain the source of money introduced in his accounts. The assessee claimed that there was no bar for the assessee in taking an alternative plea in order to prove the source of money and even the Tribunal, in deciding the appeal, could allow the assessee to take even a ground/plea not set forth in the memorandum of appeal.
The Patna High Court explained that there is nothing as such laid down under the law that once the assessee fails to establish his original plea in order to prove the source of the amount, he cannot fall back upon an alternative plea. More specifically JUSTICE ASHWINI KUMAR SINHA of the Patna High Court held that the assessee, in law is not debarred from taking an alternative plea even though the assessee had failed to prove the plea initially taken by him.
It is however utmost important to see that there was positive evidence available in support of the alternative plea taken by the assessee in a case of a question of fact. However where the point of issue is relating to a question of law there would be no limitations.