2000 (4) TMI 165 - AT - Income Tax

Summary

Issues Involved:
- Acceptance of additional evidence in support of agricultural income without affording an opportunity to the Assessing Officer (AO).
- Compliance with Rule 46A of IT Rules regarding additional evidence.
- Disclosure of agricultural income in revised return after search operations.
- Consideration of existing material on assessment records by the first appellate authority.
- Applicability of the judgment in CIT vs. Vali Mohd. Ahmed Bhai (1982) 27 CTR (Guj) 97 : (1982) 134 ITR 214 (Guj).
- Verifiability of agricultural income based on documentary evidence.

Analysis:

Issue 1: Acceptance of additional evidence without opportunity to AO
The Revenue contended that the Dy. CIT(A) erred in accepting additional evidence supporting agricultural income without giving the AO an opportunity to examine it. The Senior Departmental Representative highlighted that the agricultural income was disclosed for the first time in a revised return after search operations. It was argued that the Dy. CIT(A) should have either restored the AO's order or sent the matter back for a fresh decision in compliance with Rule 46A.

Issue 2: Compliance with Rule 46A of IT Rules
The Revenue emphasized the importance of Rule 46A of IT Rules, stating that the Dy. CIT(A) allowed the appeal based on additional evidence without meeting the requirements of the rule. The Revenue urged for adherence to procedural fairness and proper compliance with the rule in considering any additional evidence.

Issue 3: Disclosure of agricultural income post search operations
The assessee's counsel clarified that no additional evidence was presented before the Dy. CIT(A), who granted relief based on existing material in the assessment records. The disclosure of agricultural income in the revised return after search operations was highlighted, emphasizing the reliance on available documentation rather than new evidence.

Issue 4: Consideration of existing material by the first appellate authority
The counsel for the assessee referenced a judgment from the Hon'ble Gujarat High Court to support the contention that if the first appellate authority's decision is not based on additional evidence, it should not be overturned. The argument focused on the Dy. CIT(A) making a decision based on the material already on record without introducing new evidence.

Issue 5: Verifiability of agricultural income
The judgment detailed the verifiability of agricultural income through documentary evidence, including the purchase of agricultural land and income from agricultural operations. The Dy. CIT(A) accepted the declared income based on existing records and new documentary evidence, emphasizing the need for procedural fairness and compliance with Rule 46A in considering such evidence.

The judgment concluded by setting aside the Dy. CIT(A)'s order and remanding the matter for a fresh decision in accordance with the law and after providing adequate opportunity to both parties. Both appeals were treated as allowed for statistical purposes.