1986 (4) TMI 103 - AT - Income Tax

Summary

Issues:
1. Deletion of addition on account of Central sales tax liability.
2. Deletion of addition on account of advance payment of lease money.
3. Admission of fresh evidence without allowing the ITO an opportunity.
4. Setting aside the addition of depreciation claimed on a tractor after considering new evidence.

Central Sales Tax Liability Issue:
The Revenue appealed against the deletion of an addition of Rs. 5,300 made by the ITO on account of Central sales tax liability for the assessment year 1983-84. The ITO disallowed the claim as no proof of payment was furnished by the assessee. However, the CIT(A) allowed the claim based on evidence from the Excise and Taxation Officer's assessment order. The Tribunal upheld the CIT(A)'s decision, citing the evidence provided by the assessee as justifying the deduction, and rejected the Revenue's appeal.

Advance Payment of Lease Money Issue:
The second issue involved the deletion of an addition of Rs. 12,500 on account of advance payment of lease money by the assessee. The ITO had disallowed a portion of the lease amount, considering the accounting period and the lease deed terms. The CIT(A) allowed the full deduction, emphasizing the obligation to make the payment before 31st March. The Tribunal agreed with the CIT(A), stating that the full deduction was justified even under the mercantile system of accounting, as the liability had accrued before the close of the accounting period.

Admission of Fresh Evidence Issue:
The third and fourth grounds of appeal were interconnected, involving the admission of fresh evidence without allowing the ITO an opportunity and setting aside the addition of depreciation claimed on a tractor. The Tribunal examined Rule 46A of the IT Rules, which governs the admission of additional evidence. It held that the CIT(A) had the authority to admit fresh evidence and set aside the ITO's order, as long as the ITO was given a reasonable opportunity to examine or rebut the evidence. The Tribunal found no violation of Rule 46A and rejected the grounds of appeal.

In conclusion, the Tribunal dismissed the appeal, upholding the decisions of the CIT(A) regarding the Central sales tax liability, advance payment of lease money, and the admission of fresh evidence. The Tribunal clarified the procedural requirements under Rule 46A and affirmed the CIT(A)'s authority to consider new evidence and remit the issue to the ITO for further examination, ultimately finding no merit in the Revenue's grounds of appeal.