ITAT can always permit a “Legal Contention” at the appellate stage even if it is raised for the first time:

Revenue challenged the order of Hon’ble ITAT since ITAT had entertained certain additional grounds raised by the assessee for the first time which, according to the Revenue, would require investigation into the facts. The Hon’ble High Court observed that such additional grounds were nothing but legal contentions that had arisen out of CIT(A)’s order which was challenged before ITAT. It was held that ITAT can always permit a legal contention at the appellate stage even if it is raised for the first time.

[ASHOKKUMAR THAKKAR ALIAS ASHOK T. GOKLANI - TAX APPEAL NO.1418 of 2011 - GHC]