2015 (9) TMI 1059 - HC - Income Tax

Admitting additional evidence - whether Tribunal has ignored the legal provisions of Rule 46A of the I.T. Rules, by upholding legally untenable action of CIT(A) of admitting additional evidence in clear disregard of the provision of Rule 46A? - Held that - No fault can be found with the orders of the CIT(A) as well as the Tribunal. This is for the reason that the Assessing Officer had himself in response to the CIT(A) for his comments on admissibility on such additional evidence has in his report had submitted that the additional evidence filed by the assessee has to be admitted in the interest of natural justice as the respondent-assessee could not file this evidence during the course of the original proceedings before him. In view of the remand report clearly indicating that there was sufficient ground to admit and consider additional evidence, no fault can be found with the order of the CIT(A) as upheld by the Tribunal in admitting and considering the additional evidence in terms of Rule 46A of the Rules. Further the question of failure to produce the necessary evidence before the original authority and the reasons for that failure are all questions of appreciation of facts and in the absence of the findings been shown to be perverse and/or arbitrary, no question of law arises for our consideration. - Decided against revenue.

Summary

Issues:
Challenges under Section 260A of the Income Tax Act, 1961 regarding the admission of additional evidence in breach of Rule 46A of the Income Tax Rules, 1962.

Analysis:
1. The appeals by the revenue challenged a common order of the Income Tax Appellate Tribunal (the 'Tribunal') for Assessment Years 2002-03 to 2007-08, questioning the admission of additional evidence by the Commissioner of Income Tax (Appeals) (the 'CIT(A)') in disregard of Rule 46A of the Income Tax Rules, 1962.

2. A search conducted on the respondent assessee's premises led to assessment orders under Section 144 r/w 153A of the Act. The respondent assessee then filed appeals before the CIT(A), seeking to introduce additional evidence not presented before the Assessing Officer, which was forwarded for the Assessing Officer's comments on admissibility.

3. The Assessing Officer opined that the additional evidence should be admitted in the interest of natural justice, as the respondent-assessee was unable to provide it during the original assessment proceedings. The CIT(A) partially allowed the appeals based on this additional evidence, prompting the revenue to appeal to the Tribunal.

4. The Tribunal, after reviewing the facts and the CIT(A)'s order, concluded that the respondent-assessee had valid reasons for not presenting the evidence earlier, and the Assessing Officer supported admitting the evidence. Consequently, the Tribunal held that Rule 46A was not violated and dismissed the revenue's appeal.

5. The revenue contended that the additional evidence should not have been admitted due to the respondent-assessee's non-appearance before the Assessing Officer. However, the High Court found no fault with the CIT(A) and Tribunal's decisions, citing the Assessing Officer's recommendation to admit the evidence for natural justice reasons.

6. The High Court upheld the orders of the CIT(A) and the Tribunal, emphasizing that the decision to admit and consider additional evidence was based on valid grounds and did not violate Rule 46A. The court noted that the failure to produce evidence before the original authority was a factual issue, and in the absence of any perverse findings, no legal question arose.

7. Consequently, all six appeals were dismissed, with no costs awarded.