2016 (4) TMI 809 - AT - Income Tax

Refusal to admit additional evidence - Held that - We notice that the assessee could collect various evidences only after passing of the assessment order. According to the assessee, these additional evidences are vital documents which are required to be considered in order to adjudicate the issue in a judicious manner. The principle Audi alteram partem , i.e. no man should be condemned unheard is the basic canon principles of natural justice and accordingly we find merit in the contentions of the assessee that Rule 46A of the Income Tax Rules cannot be over ride the principles of natural justice. Hence we are of the view that the learned CIT(A) was not justified in refusing to admit the various additional evidences furnished by the assessee. Since the assessee was not given opportunity to contradict the findings given by the AO by not admitting the additional evidences, we are of the view that the Ld CIT(A) should re-adjudicate all the issues afresh by admitting the additional evidences. Accordingly, we set aside the order of learned CIT(A) and restore all the issues to the file of the learned CIT(A) with the direction to admit the additional evidences that may be furnished by the assessee. After admitting the same, the learned CIT(A) may call for the remand report from the Assessing Officer, if he found the same necessary. After confronting with the remand report, if any, that may be furnished by the AO with the assessee, the learned CIT(A) my take appropriate decision in accordance with law. - Decided in favour of assessee for statistical purpose.

Summary

Issues:
Admission of additional evidences before the CIT(A) and the consequent addition made by the Assessing Officer.

Analysis:
The appeal was filed against the CIT(A)'s order for the assessment year 2007-08. The assessee contested the decision of the CIT(A) in not admitting additional evidences and confirming the addition of ?10.06 crores by the Assessing Officer. The assessee argued that crucial information was not provided during the assessment proceedings, hindering effective rebuttal. The assessee later obtained the alleged incriminating information after the assessment was completed and sought to submit it as additional evidence. However, the CIT(A) refused to admit the additional evidences citing non-satisfaction of Rule 46A conditions.

The learned DR contended that admission of additional evidence is not automatic and the assessee must establish compliance with Rule 46A conditions. Various court decisions were cited to support the contention that production of additional evidences is not an absolute right. The DR highlighted the use of circumstantial evidence in assessments and referred to precedents where similar issues were decided against the assessee.

In response, the AR argued that natural justice principles necessitate consideration of all evidences before making a decision. The AR emphasized that the assessee collected documents post-assessment, and disregarding them would violate natural justice principles. The AR maintained that Rule 46A should not override natural justice.

Upon review, the Tribunal found merit in the assessee's argument that natural justice principles should prevail over Rule 46A. The Tribunal held that the CIT(A) erred in rejecting the additional evidences, as the assessee was deprived of the opportunity to counter the AO's findings. Consequently, the Tribunal directed the CIT(A) to re-adjudicate the issues by admitting the additional evidences and seeking a remand report from the AO if necessary.

In conclusion, the appeal was allowed for statistical purposes, and the order was pronounced in open court on 6.4.2016.