2017 (1) TMI 995 - HC - Income Tax

Admission of additional evidence by the tribunal - Validity of Chamber Summons - appellant seeks to introduce further evidence by way of an Arbitral award which is in the nature of a consent award - eligibility to Section 54F - there is an allotment letter but not construction was made - amount not deposited in the Capital Gain account with Bank - Held that - The amendment now sought and which seeks to include the copy of the arbitral award as well as certain correspondence the appellant seeks to extend reliance upon the additional evidence to these documents over and above the Additional Evidences Paper Book filed before the Tribunal. The documents have sought to be relied upon in the form of the Arbitral award is pursuant to an Arbitral agreement dated 20th December, 2013 as we have observed earlier which is more than a year after the impugned order was passed. Furthermore, the correspondence sought to be relied upon in the above present Chamber Summons as part of the amendment sought by at paragraph xv on page 6 of the appeal paper book are the very same documents which were filed before the Tribunal along with the Additional Evidences Paper Book. In our view, the amendment sought is impermissible. We are not inclined to allow the Chamber Summons and we therefore declare Chamber Summons as dismissed.

Summary

Issues:
1. Amendment sought in a pending Income Tax Appeal to include an Arbitral award.
2. Denial of exemption under Section 54F of the Income Tax Act.
3. Dismissal of appeal by the Tribunal for non-compliance with Section 54F.
4. Application for additional evidence before the Tribunal.
5. Validity of the Tribunal's order dismissing the appeal.
6. Introduction of further evidence through an Arbitral award.
7. Interpretation of the Arbitral award in relation to the original claim.
8. Legal arguments based on Supreme Court and High Court decisions.
9. Consideration of subsequent events in appellate proceedings.
10. Admissibility of additional evidence and fairness to the opposing party.

Analysis:

1. The appellant sought an amendment in a pending Income Tax Appeal to include a copy of an Arbitral award dated 9th May, 2014. The appellant argued that the award settled disputes regarding the acquisition of property, thus fulfilling the requirements of Section 54F of the Income Tax Act.

2. The appellant was denied exemption under Section 54F by the Tribunal for failing to construct or purchase a residential house within the stipulated time frame. The appellant's reliance on a letter of allotment was insufficient to meet the statutory requirements.

3. The Tribunal dismissed the appeal due to the appellant's non-compliance with Section 54F. The appellant's claim of investing in a flat that did not receive necessary sanctions was rejected, as the capital gain was not deposited in the designated account within the prescribed timeline.

4. The appellant made an application for additional evidence before the Tribunal, seeking to introduce documents supporting compliance with Section 54F. The Tribunal dismissed the appeal without explicitly addressing the application for additional evidence.

5. The Chamber Summons challenged the validity of the Tribunal's order, arguing that the Tribunal failed to consider the application for additional evidence before dismissing the appeal. The appellant contended that the Tribunal should have allowed the submission of additional evidence to explain compliance with Section 54F.

6. The appellant sought to introduce further evidence through an Arbitral award, indicating a change in the property acquisition as per the award terms. The appellant argued that the transaction was completed as per the Arbitral award, justifying the inclusion of the award in the appeal proceedings.

7. The Arbitral award revealed that the appellant relinquished the original claim under previous agreements for the acquisition of property. The Court analyzed the award's terms and concluded that it did not align with the original transaction intended to fulfill the requirements of Section 54F.

8. Legal arguments were presented based on Supreme Court and High Court decisions, emphasizing the importance of introducing vital evidence to support the appellant's claim for exemption under Section 54F.

9. The Court considered the relevance of subsequent events in appellate proceedings, citing cases where new developments were taken into account to ensure justice between the parties. However, the Court found that the Arbitral award did not serve as a continuation of the original transaction for exemption under Section 54F.

10. The Court evaluated the admissibility of additional evidence and fairness to the opposing party. It concluded that the proposed amendment to include the Arbitral award and related documents was impermissible, as the documents were already part of the original evidence submitted to the Tribunal. The Chamber Summons seeking the amendment was dismissed, with no costs awarded.