2009 (6) TMI 79 - HC - Income Tax

Best judgment assessment Additional evidence opportunity to AO held that - , admittedly additional evidence was sought to be introduced by the assessee before the first appellate authority which was so permitted. Thereafter, such additional materials were considered by the first appellate authority in coming to a conclusion different from what was recorded by the Assessing Officer in the assessment made under section 144 of the Act. No opportunity was given to the Assessing Officer with regard to the additional materials or evidence that was introduced by the assessee, though under sub-rule (3) of rule 46A such a requirement is clearly spelt out. It is such a situation that the learned Tribunal has held that the order of the first appellate authority was contrary to the provisions of rule 46A(3) of the Rules. Reading the provisions of the aforesaid sub-rule (3) of rule 46A which are clear and unambiguous and, do not admit any contrary view, we do not see as to how any infirmity can be found in the order of the learned Tribunal. Order of ITAT maintained.

Summary

Issues:
Appeal against order interfering with assessment under section 144 of the Income-tax Act, 1961 - Interpretation of rule 46A of the Income-tax Rules - Compliance with procedural requirements for introducing additional evidence before the first appellate authority.

Analysis:

1. The appellant challenged the order passed by the Income-tax Appellate Tribunal, Guwahati Bench, which interfered with the assessment under section 144 of the Income-tax Act, 1961. The learned Commissioner of Income-tax (Appeals) had revised the assessment due to the absence of proof of notice service on the assessee and the inability of legal heirs to produce necessary documents after the demise of the assessee's proprietor.

2. The Revenue appealed to the Tribunal, arguing that the introduction of fresh evidence by the assessee without an opportunity for the Assessing Officer violated rule 46A of the Income-tax Rules. The Tribunal remanded the matter to the first appellate authority to allow the Assessing Officer an opportunity to consider the new evidence and make a decision accordingly.

3. The High Court examined the Tribunal's order and the provisions of rule 46A of the Income-tax Rules. The appellant's counsel referred to sub-rule (4) of rule 46A, contending that it did not require an opportunity for the Assessing Officer. However, the Court found that sub-rule (3) of rule 46A applied to the present case, necessitating an opportunity for the Assessing Officer when new evidence is introduced.

4. The appellant relied on a judgment of the Orissa High Court and a decision of the Bombay High Court, but the Court distinguished those cases as they dealt with different aspects of the law. In the present case, additional evidence was introduced without affording the Assessing Officer an opportunity, contravening the requirements of rule 46A(3) of the Rules.

5. The Court upheld the Tribunal's decision, emphasizing the clear and unambiguous provisions of sub-rule (3) of rule 46A. As the first appellate authority did not comply with the procedural requirements for introducing additional evidence, the Court found no merit in the appeal and dismissed it. Consequently, the order of the Income-tax Appellate Tribunal was affirmed, concluding the legal proceedings in the matter.