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TMI Blog2006 (8) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... A(2)(b) at the rate of 21 per cent was excessive. When confronted, the assessee replied that interest paid to the Bank on monthly basis worked out to 17.30 per cent and the bank provides loans only against security of properly and stock. Besides, the bank also charged various expenses and, therefore, the cost of loans taken from banks varied from 15 per cent to 21 per cent. But in the present case, the assessee was not required to furnish any security against the loans taken from persons covered under section 40A(2)(b) and also the money was to be returned at assessee s own convenience. These submissions did not find favour with the Assessing Officer who allowed interest at the rate of 18 per cent and made disallowance of interest of ₹ 1,14,288 at the time of completing the assessment. 3. Aggrieved, the assessee impugned the addition in appeal before the CIT(A). The submissions made before the Assessing Officer were reiterated. However, the Ld. CIT(A) allowed the claim of the assessee by relying on the decision of the ITAT, Amritsar Bench in the case of Anil Kumar v. IAC [1986] 15 ITD 695 where interest paid at the rate of 28 per cent was allowed and also referred to the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 001-02, dated 2-9-2005 and the Tribunal decided the same in favour of the assessee and against the revenue by recording following findings in para 6 of the order : 6. I have heard both the parties and carefully considered the rival contentions with reference to facts, evidence and material on record. The fact that the assessee had claimed interest at the rate of 24 per cent and was allowed by the revenue in the assessment year 2000-01 has not been disputed by the revenue. Therefore, principle of consistency demanded that no addition in respect of the same should have been made for the assessment year under reference. Besides, this issue is squarely covered by the decision of the ITAT (SMC) Amritsar Bench, in the case of Rimpy Processors (P.) Ltd. v. ACIT Cir. 5, Amritsar (supra) where it was held in para 4 as under : 4. Having heard the rival submissions and perused the relevant material on record, it is noted that the assessee was paying the interest to these persons at the rate of 24 per cent in the proceeding assessment years as well. Page 173 of the paper book is a chart showing interest to these persons at the rate of 24 per cent in the preceding and succeeding y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition in appeal before the CIT(A). It was submitted before the CIT(A) that the Assessing Officer asked the assessee to file confirmation from the said party on 27-2-2004. It was submitted that the said confirmation was duly filed before the Assessing Officer and the same indicated that the party was being assessed to tax and the Permanent Account Number was also given. It was submitted that the Assessing Officer did not call for any further information. During the course of appeal proceedings, the assessee also filed a copy of Bank A/c of M/s. Aneja Footwear Agency from where amount was given to the assessee alongwith affidavit of the party. By referring to this evidence, the ld. CIT(A) deleted the addition. The revenue is aggrieved with the order of the CIT(A). Hence, this appeal before us. 9. The Ld. DR. Sh. Achal Sharma, strongly relied on the order of the Assessing Officer and submitted that a copy of Bank A/c was not filed before the Assessing Officer during the course of assessment proceedings, therefore, credit-worthiness of the party was not established. He submitted that the assessee filed an affidavit of the party alongwith a copy of Bank A/c only before the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear Agency (a copy placed at page 7 of the paper book). This affidavit clearly mentions that the amount was given to the assessee by an A/c Payee demand draft by debiting party s current account with Bank of Punjab Ltd., Ludhiana. In this affidavit, even Permanent Account Number alongwith Ward where the party was being assessed have been mentioned. Besides, the assessee had also filed a copy of Bank A/c of M/s. Aneja Footwear Agency (a copy placed at page 9 of the paper book) where debits of the amount given to the assessee duly appeared. Admittedly, such evidence was not furnished during the course of assessment proceedings and, therefore, was a fresh evidence. The admission of fresh evidence is governed by provisions of Rule 46A of Income-tax Rules, 1962. The provisions of Rule 46A read as under : 46A(1) The appellant shall not be entitled to produce before the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer except in the following circumstances, namely: (a) where the Assessing Officer has refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been satisfied. But the Ld. CIT(A) has not recorded any reason for admission of such evidence and in a summary manner has deleted the addition by recording following findings : Before me the counsel produced copy of bank account of the lender and his affidavit. It is evident that loan was paid out of current account of lender and he is also a regular income-tax assessee. Being satisfied that the transaction is genuine, the addition of ₹ 2,10,849 is deleted. Further sub-rule (3) of Rule 46A mandates that the Ld. CIT(A) shall not take cognizance of the additional evidence unless the Assessing Officer had been allowed a reasonable opportunity to examine the evidence or to produce any evidence in rebuttal of the evidence produced by the assessee. This part of the Rule had also not been complied, with by the Ld. CIT(A) while admitting and relying upon such evidence. The evidence submitted by the assessee was directly entertained without referring the same to the Assessing Officer under sub-rule (1) of rule 46A. This action of the Ld. CIT(A) was not only contrary to the provisions of Rule 46A, but was also contrary to the Rules of natural justice as no evidence could h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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