9911796707
TMI Blog2006 (7) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Interest-tax Act. In the computation of taxable interest, as per the revised return filed by the assessee, the assessee claimed deduction on account of interest on commercial papers, to the tune of Rs. 24,65,095. Before the Assessing Officer, the assessee submitted that an investment of Rs. 9,50,25,039 had been made by it with M/s. Kotak Mahindra Finance Ltd., on which, interest at 10.25 per cent. was earned, for 90 days, amounting to Rs. 24,65,095. The Assessing Officer, however, observed that the assessee had not filed any evidence or proof that this interest was exempt, as per the Interest-tax Act. As such, the Assessing Officer added this amount to the taxable interest shown by the assessee. On appeal, by virtue of the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee, is so since section 21 of the Interest-tax Act, which lays down the sections of the Income-tax Act which are applicable to the Interest-tax Act, does not mention section 295 of the Income-tax Act. It is only under section 295 of the Income-tax Act that rule making power has been exercised and the Income-tax Rules, 1962, have been framed. Rule 46A(3) is a rule under the Income-tax Rules, 1962. That being so, the grievance of the Department that additional evidence was entertained by the Commissioner of Income-tax (Appeals) in this case at the back of the Assessing Officer, is not maintainable. Further, learned counsel for the assessee has submitted that even section 15(4) of the Interest-tax Act, which has been sought to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amed. Section 295(1) runs as follows : 295. (1) The Board may, subject to the control of the Central Government, by notification in the Gazette of India, make rules for the whole or any part of India for carrying out the purposes of this Act. Learned counsel for the assessee has pleaded that applicability of the provisions of the Income-tax Act, to the Interest-tax Act, is governed by section 21 of the Interest-tax Act. For facility, section 21 of the Interest-tax Act is being reproduced hereunder : Section 21. Application of provisions of Income-tax Act. The provisions of the following sections and Schedules of the Income-tax Act and the Income-tax (Certificate Proceedings) Rules, 1962, as in force from time to time shall apply wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act, as is clear from a perusal of section 21 of the Interest-tax Act, is not applicable to the Interest-tax Act. This means that power to frame rules for carrying out the purposes of the Income-tax Act has not been made applicable to the Interest-tax Act. This is so, because the Interest-tax Act contains section 27, which carries the power to make rules for carrying out the purposes of the Interest-tax Act. Obviously, the rule-making power for making rules to carry out the purposes of one specific enactment cannot, unless so specified by the Legislature, be imported from another separate Act. That is the reason why section 295 of the Income-tax Act does not find mention in the sections enumerated in section 21 of the Interest-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) of the Interest-tax Act instead of rule 46A(3) of the Income-tax Rules, 1962 . It is section 15(5) of the Interest-tax Act, which is the governing section here. This section reads as follows : 15. (5) The procedure to be adopted in the hearing and the determination of the appeals shall, with any necessary modification, be in accordance with the procedure applicable in relation to the incometax. Section 15(5) of the Interest-tax Act, therefore, makes the position crystal clear. It specifically lays down that the hearing and the determination of the appeals before the learned Commissioner of Interest-tax (Appeals), which includes entertaining of additional evidence, is to be in accordance with the procedure applicable in relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een allowed a reasonable opportunity (a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. Rule 46A(3) (supra) thus casts a statutory obligation on the Commissioner (Appeals) not to take into account any additional evidence unless the Assessing Officer has been allowed a reasonable opportunity to rebut the same. In the present case, as the impugned order itself shows, no opportunity has been afforded to the Assessing Officer by the learned Commissioner of Income-tax (Appeals) before entertaining the additional evidence. This action is clearly violative of rule 46A(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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