2014 (6) TMI 843 - AT - Income Tax

Admission of additional evidence under Rule 46A of the Act Held that - Relying upon Prabhavati S. Shah v. CIT 1998 (2) TMI 107 - BOMBAY High Court - while ordinarily the matter should go back to the file of the CIT(A) to meet the objection/s raised by the AO it is not necessary or even proper to do so in the facts and circumstances of the present case - the assessee s counsel had withheld all the papers on account of his differences with the assessee, and who had therefore with great difficulty - through the agency of a common friend, reconstructed the file - there was even a conflict with regard to the receipt of the assessment order by the assessee - being on 28.3.2006 and 29.12.2006 as per the AO and the assessee - it constitute valid grounds for non-furnishing the said details and evidences before the AO in the assessment proceedings, satisfying the condition of r.46A(c) - The CIT(A) was justified in admitting the additional evidences adduced before him by the assessee Decided against revenue.

Summary

Issues: Validity of admission of additional evidences by the CIT(A) in contravention of rule 46A of the Income Tax Rules, 1962.

The judgment pertains to an appeal by the Revenue against the Order by the Commissioner of Income Tax (Appeals)-18, Mumbai, which partly allowed the assessee's appeal contesting its assessment under section 143(3) of the Income Tax Act, 1961 for the assessment year 2003-04. The main issue in this appeal is the validity in law of the admission of additional evidences by the CIT(A), allegedly in contravention of rule 46A of the Income Tax Rules, 1962. In a previous round, the tribunal had allowed condonation of delay in filing the appeal before the first appellate authority due to the assessee's dependency on his counsel. The CIT(A) admitted additional evidences related to loan agreements with two creditors, which were treated as unexplained income by the Assessing Officer. The Revenue objected to the admission of these additional evidences, citing rule 46A(a) of the Rules.

The Tribunal analyzed the provisions of rule 46A(1) of the Income Tax Rules, 1962, which restricts the appellant from producing new evidence before the appellate authority unless certain conditions are met. The Tribunal referred to various High Court decisions emphasizing the mandatory nature of rule 46A. The Tribunal noted that the CIT(A) should have explicitly stated reasons for admitting additional evidences contrary to the Assessing Officer's objection. However, the Tribunal found that in this case, the assessee's counsel had withheld crucial papers due to differences with the assessee, leading to difficulties in reconstructing the file. The tribunal observed discrepancies in the receipt of the assessment order by the assessee. Given these circumstances, the tribunal concluded that the reasons justifying the condonation of delay in the previous round also supported the non-furnishing of details and evidences before the Assessing Officer, satisfying the conditions of rule 46A(c). Therefore, the CIT(A) was deemed justified in admitting the additional evidences. The Tribunal held that the CIT(A) was obligated to seek the production of relevant evidences under rule 46A(4) and dismissed the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to admit additional evidences. The judgment highlights the importance of following procedural rules, such as rule 46A, while allowing the admission of new evidence in income tax appeals.