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2023 (4) TMI 200 - HC - Income TaxAdmitting new evidence under Rule 46A(1) of the Income Tax Rules - Whether CIT(A) and the ITAT were justified in admitting new evidence being the order issued by the Director General (Exemption)? - HELD THAT - If in the facts of the present case, CIT(A) was of the opinion that the Assessee was prevented from sufficient cause in producing the exemption Order before the AO which is relevant to any ground of appeal, we do not find error with this approach adopted by the CIT(A). The exemption Order was made only after the Order of the AO. No merit in the contention of the Appellant that CIT(A) has not recorded reasons in writing for admission of new evidence. CIT(A) has recorded that as a result of the exemption Order, the Appellant has been taken out of the mischief of Section 3 by the first proviso to Section 4 of the E.T. Act and, therefore, the Appellant is not liable to be charged for E.T. for Assessment years under appeal. Sub-rule(4) of Rule 46-A starts with an obstante clause empowering the CIT(A) to direct the examination of any witness and production of any document to enable him to dispose of the appeal. The exercise of power by the CIT(A) in allowing admission of the exemption Order in support of the Appellant's case, cannot be said to be arbitrary or perverse exercise to warrant interference. CIT(A) having held that the additional evidence in the form of order of exemption, goes to the very root of the ground of Appeal i.e. the charge of the E.T. in the Assessee's case, the CIT(A) was justified in its approach in admitting such exemption Order while allowing the Appeal. The requirements for admitting additional evidence stands satisfied.
Issues:
The case involves the admission of new evidence by the CIT(A) and the ITAT, the applicability of Rule 46-A of the Income Tax Rules, 1962, and the validity of an exemption order dated 31.07.2001 issued by the Director General (Exemption) in the context of Expenditure Tax for the Assessment Years 1995-96 and 1996-97. Admission of New Evidence: The Appellant challenged the admission of new evidence, being the exemption order dated 31.07.2001, by the CIT(A) and the ITAT. The Appellant contended that the conditions entitling the Appellant to produce new evidence were not satisfied under Rule 46-A(1) of the IT Rules. However, the CIT(A) admitted the exemption order as it was deemed relevant to the grounds of appeal, specifically regarding the charge of Expenditure Tax. The ITAT upheld the decision, stating that the Assessee was not liable for Expenditure Tax based on the exemption order and the provisions of the E.T. Act. Validity of Exemption Order: The exemption order dated 31.07.2001 was issued after the Assessment Order for the relevant years. The CIT(A) and the ITAT found that the exemption order was crucial to the Assessee's case and was not disputed in terms of validity. The CIT(A) admitted the exemption order under Rule 46-A(1)(c) as it directly impacted the charge of Expenditure Tax for the Assessee. The ITAT concurred with this decision, emphasizing that the CIT(A) correctly implemented the exemption order. Compliance with Rule 46-A: Rule 46-A of the IT Rules allows for the admission of additional evidence under specific circumstances. The CIT(A) was found to have followed the provisions of Rule 46-A(1)(c) by admitting the exemption order, which was considered relevant to the grounds of appeal. The CIT(A) justified the admission of the exemption order by stating that it took the Assessee out of the scope of the E.T. Act, aligning with the first proviso to Section 4(a) of the E.T. Act. The ITAT supported this decision, indicating that the AO's expectations were met by the CIT(A) upon considering the exemption order. Conclusion: The Appeals were dismissed, with the Court finding no reason to interfere with the concurrent decisions of the CIT(A) and the ITAT. The CIT(A) was deemed justified in admitting the exemption order as new evidence, satisfying the requirements of Rule 46-A. The exemption order played a crucial role in determining the Assessee's liability for Expenditure Tax, leading to the dismissal of the Appeals without costs.
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