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2017 (6) TMI 455 - HC - Income TaxViolation of the principles of nature justice - CIT-A accepting additional evidence - Held that - In the over all facts and circumstances of the case, there is no violation of the principles of nature justice or fair play by the CIT (Appeals) in accepting the additional evidence in the form of the statement of one of the directors of the respondent-assessee. The CIT (Appeals) had given sufficient opportunity to the Assessing Officer confronting him with the said evidence and had given sufficient time to him to respond to the same, but the Assessing Officer failed to avail the opportunity so accorded to him. We answer the above substantial question of law in favour of the respondent-assessee and against department and hold that the CIT (Appeals) had not committed any error of law, in considering the statement of one of the directors of the respondent-assessee as recorded before him and that there was no violation of Rule 46-A of the Rules or of the principles of natural justice in accepting/relying upon the said statement as part of evidence.
Issues Involved:
1. Justification of ITAT in affirming the CIT (Appeals) order without giving the Assessing Officer (AO) a proper opportunity to rebut the statement of one of the directors of the respondent-assessee as required under Rule 46-A of the Rules. Issue-wise Detailed Analysis: 1. Justification of ITAT in affirming the CIT (Appeals) order without giving the AO a proper opportunity to rebut the statement of one of the directors of the respondent-assessee as required under Rule 46-A of the Rules: The appeal under Section 260-A of the Income Tax Act was filed against the ITAT's order dated 15.03.2016, which affirmed the CIT (Appeals) order. The respondent-assessee filed its return for the assessment year 2009-10 showing a loss, but the taxable income was computed as ?157,33,11,500/-. The assessment order was appealed before the CIT, who partly allowed the appeal and deleted certain additions. During the appeal, the CIT (Appeals) recorded the statement of one of the directors, Sri S.C. Agarwal, and sent it to the AO for comments. The AO did not respond, leading the CIT (Appeals) to decide on merits. The substantial question of law was whether the ITAT was justified in affirming the CIT (Appeals) order without affording the AO a proper opportunity to rebut the director's statement as required under Rule 46-A. The court noted that the CIT (Appeals) had the power under Section 250 of the Act to make further enquiries. Rule 46-A allows the appellate authority to take additional evidence to dispose of the appeal or for any substantial cause. The court clarified that Rule 46-A(1) pertains to additional evidence by the appellant (assessee) and does not authorize the department or the appellate authority to take suo-moto action for additional evidence. However, sub Rule 4 of Rule 46-A allows the appellate authority to direct the production of documents or examination of witnesses for disposing of the appeal or for any substantial cause. The CIT (Appeals) had given notice to the AO with the statement and details for comments, but the AO did not respond despite reminders. The court found that the CIT (Appeals) had given sufficient opportunity to the AO, adhering to principles of natural justice. The AO's failure to respond indicated no violation of Rule 46-A or natural justice principles. The court concluded that the CIT (Appeals) did not err in considering the director's statement and there was no violation of Rule 46-A or natural justice. The statement was not the sole basis for the CIT (Appeals) decision, which was independent of the statement. The court dismissed the appeal, affirming the ITAT's decision.
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