2015 (9) TMI 1047 - HC - Income Tax

Admission of additional evidence - non furnishing of time to verify the evidence to revenue - Held that - In the case in hand, the reasons assigned by the Assessing Officer for asking for further time to verify the documents filed by the assessee was bonafide as he was on election duty and number of cases of assessment in which limitation was going to expire was pending and, therefore, Assessing Officer was busy and thus, the reason assigned by him for asking more time was sufficient. He was prevented by sufficient cause from submitting the report. The learned Commissioner (Appeals) as well as learned ITAT have not been able to consider these relevant facts in their correct perspective before passing the impugned order. The discretion exercised by the Commissioner (Appeals) while refusing to grant further time to admit the additional evidence has not been based on sound judicial principles. The assessing authority had given satisfactory explanation and sufficient cause for not verifying the additional evidence filed before the appellate authority. The authorities ought to have granted some reasonable time to the Assessing Officer to verify the additional evidence. On due consideration of the aforesaid, we are of the view that Commissioner as well as learned Tribunal erred in proceeding with the matter and admitting the additional evidence filed by the assessee without granting further time to verify the same and submit a report. Thus, we set aside the impugned orders dated 23.8.2013, 29.7.2013, 23.8.2013 passed by the Income Tax Appellate Tribunal, by answering the question of law in favour of the appellant department and remit the matter back to the learned Commissioner (Appeals) with a direction that sufficient time be granted to the department to verify the documents and rebut that evidence and thereafter decide the controversy a fresh in accordance with law, as early as possible, and endeavour shall be made to conclude it within a period of six months from the date of receipt of certified copy of the order. Decided in favour of the revenue

Summary

Issues Involved:
1. Whether the Commissioner (Appeals) granted reasonable opportunity to the Assessing Officer as required under Rule 46A of the Income Tax Rules, 1962.
2. Whether the explanation offered by the Deputy Commissioner of Income Tax for not submitting the comments due to being busy in deciding limitation cases and election duty constituted sufficient cause for not submitting the report.

Issue-wise Detailed Analysis:

1. Reasonable Opportunity to the Assessing Officer:
The core issue was whether the Commissioner (Appeals) provided a reasonable opportunity to the Assessing Officer to examine the additional evidence as mandated by Rule 46A of the Income Tax Rules, 1962. The appellant argued that the Assessing Officer was not given sufficient time to comment on the additional evidence submitted by the assessee for the first time before the Commissioner (Appeals). The Commissioner (Appeals) admitted the additional evidence and decided the appeal without granting further time to the Assessing Officer, which was affirmed by the ITAT. The High Court found that the Commissioner (Appeals) and ITAT erred in their judgment by not providing the Assessing Officer adequate time to verify the additional evidence, thus violating Rule 46A(3). The judgment emphasized that the appellate authority must grant a reasonable opportunity to the Assessing Officer to examine the evidence or cross-examine the witnesses before considering the additional evidence.

2. Explanation for Not Submitting the Report:
The Deputy Commissioner of Income Tax explained that he could not submit comments on the additional evidence due to being occupied with time-bound assessments and election duties. The High Court accepted this explanation as a sufficient cause, noting that the Assessing Officer was genuinely prevented from verifying the additional evidence due to these pressing duties. The Court highlighted that the Commissioner (Appeals) and ITAT failed to consider these relevant facts correctly. The Court concluded that the Assessing Officer's request for additional time was justified and should have been granted by the Commissioner (Appeals).

Conclusion:
The High Court set aside the orders of the Commissioner (Appeals) and ITAT, remitting the matter back to the Commissioner (Appeals) with instructions to grant sufficient time to the Assessing Officer to verify the additional evidence and submit a report. The judgment underscored the importance of adhering to procedural rules under Rule 46A, ensuring that both parties are given a fair opportunity to present their case. The appeals were allowed in favor of the revenue, with a directive to conclude the matter within six months.

Final Judgment:
The substantial questions of law were answered in favor of the revenue. The appeals were allowed, and the matter was remitted back to the Commissioner (Appeals) for a fresh decision after granting reasonable time to the Assessing Officer to verify the additional evidence. The order emphasized compliance with procedural rules and fair opportunity for all parties involved.