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TMI Blog2019 (9) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... y of such Additional Evidences admitted by Commissioner of Income Tax (Appeals) is the statutory right of the AO, conferred under Rule 46A(3) of I.T. Rules. Following the aforesaid precedents in the cases of CIT vs. Manish Buildwell [ 2011 (11) TMI 35 - DELHI HIGH COURT] and ITO vs. Pardeepa Rani [ 2016 (8) TMI 1461 - ITAT DELHI] ; we set aside the aforesaid impugned appellate order dated 29.06.2012 of Ld. CIT(A) with the direction to pass fresh order. If the Ld. CIT(A) decides to admit Additional Evidences, he should clearly state the specific clause(s) of Rule 46A(1) of I.T. Rules that would apply; while recording the reasons under Rule 46A(2) of I.T. Rules. Further, if the Ld. CIT(A) decides to admit Additional Evidences, reasonable opportunity prescribed under Rule 46A(3) of I.T. Rules must be provided by the Ld. CIT(A) to the AO. - ITA No:- 4373/Del/2012 - - - Dated:- 19-9-2019 - H.S. SIDHU (JUDICIAL MEMBER) AND ANADEE NATH MISSHRA (ACCOUNTANT MEMBER) Revenue by : Shri Surender Pal, Sr. DR Assessee by : Shri G.S. Kohli, CA ORDER Anadee Nath Misshra, (A) This appeal by Revenue is filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndi of above judgment is not applicable in this case. 9. That the Ld. CIT(A) erred in deleting the addition of ₹ 54,29,787/- made on account of unexplained sundry creditor merely on the submission of the assessee completely ignoring the fact that the assessee failed to furnish neither the complete address nor the confirmations of the sundry creditors either before the CIT (A). 10. That the Ld. CIT (A) erred in deleting the additions ₹ 54,29,787/- made on account of unexplained sundry creditors on the basis of the judgment of Hon ble Delhi High Court in the case of CIT v. Escorts Ltd. (338 ITR 435) as the facts of this case are completely different and the ratio decidendi on above judgment is not applicable in this case. 11. That the Ld. CIT (A) erred in deleting the addition of ₹ 4,83,994/- made on account of incorrect claim of depreciation merely on the submission of the assessee completely ignoring the reasons mentioned by the AO. 12. That the Ld. CIT (A) erred in deleting the addition of ₹ 44,32,000/- made on account of unexplained addition in capital merely on the submission of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty on the basis of additional evidence submitted by the assessee under rule 46A thereby ignoring the reasons mentioned in the assessment order. 3. That the Ld. CIT (A) erred in deleting the addition of ₹ 20,69,898/- made on account of bogus purchases based on the judgment of Hon ble Delhi High Courts in the case of CIT' V. Escorts Ltd.(338 ITR 435) as the facts of this case are completely different and the ratio dicidendi of above judgment is not applicable in this case. 4. That the Ld. CIT (A) erred in deleting the addition of ₹ 54,29,787/- made on account of unexplained sundry creditors on the basis of judgment of Hon ble Delhi High Court in the case of CIT V. Escorts Ltd. (338 ITR 435) as the facts of this case are completely different and the ratio dicidendi on above judgment is not applicable in this case. 5. That the Ld. CIT(A) erred in deleting the addition of ₹ 4,83,994/- made on account of incorrect claim of depreciation merely on the submission of the assessee, thereby completely ignoring the reasons mentioned by the AO. 6. That the Ld. CIT (A) erred in deleting the addition of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv. Add: Interest Payment disallowed : ₹ 1,20,213 v. Add: Personal expenses : ₹ 18,482 3. INCOME FROM OTHER SOURCES 1,52,50,621 i. As per the return : NIL ii. Unexplained Sundry Creditor: ₹ 54,29,787 ii. Unexplained in capital : ₹ 44,32,000 iv. Unexplained investment in fixed assets : ₹ 8,59,643 v. Deemed dividend : ₹ 45,29,191 4. GROSS TOTAL INCOME 2,18,04,516 5. LESS DEDUCTION UNCER CHAPTER VIA (under section 80C and 80D) 1,09,461 6. TOTLA INCOME 2,16,95,055 (B.1) I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s u/s 37(1) of the Income-tax Act as you have failed to furnish any evidence in support of your claim despite getting repeated opportunities. 3) It also appears that you have taken housing loan from the Union Bank of India keeping your property A-313, Shivalik, Malviya Nagar, New Delhi as per the details submitted by the bank. Kindly furnish the complete details regarding the housing loan taken, complete address of the property purchased. Kindly also explain why you have not disclosed this fact in your return of income or in your submissions. Kindly also explain how you have submitted in your submission dated 10.08.2011 that you have no immovable asset. Kindly also explain why the annual rent from the above property should not be estimated as you have failed to furnish your personal balance sheet for the F. Y. 2007-08 and 2008-09. 4) The details regarding the notices issued to the assessee and failure of the assessee to make compliance are given below: Sl.No. Details of notice issued Mode of service Remarks 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) of the Income-tax Act, 1961, are initiated for non-compliance of above three statutory notices without any reasonable cause. Since, the assessee failed to furnish the books of account with supporting bills/vouchers/invoices, hence, the expenses shown by the assessee are not verifiable. It is also evident that books of account are not maintained. There cannot be any other explanation of the non-production of books of account as the Authorized Representative appeared on 02.08.2011 and 0.08.2011 and he was directed to produce the books of account vide order sheet entry. Since, books of account have not been produced despite getting reasonable opportunities and adequate time, hence, question of rejecting the books of account does not arise. Moreover, it is also evident that the assessee has not maintained books of account as per the provision of section 44AA of the Income-tax act, 1961, thus, penalty proceedings u/s 271A of the Income-tax Act, 1961 are initiated for non-maintenance of books of account as required by section 44AA of the Income-tax Act, 1961. Now the only option left is to complete the assessment u/s 144 of the Income-tax act, 1961, on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with the best judgment of the A.O; (vi) In judging a best judgment assessment, the powers of the appellate are restricted. They have merely to see whether the books of accounts were rightly rejected or not and thereafter if the conclusion is positive, then whether or not the basis for estimation has reasonable nexus with the estimate. Even though the basis adopted may not be most appropriate basis, but if it is such that such conclusion was also possible among several other possible conclusions, the estimate of the A.O cannot be disturbed; and (vii) While making best judgment assessment:- (a) the conclusion drawn should be unbiased and rationally made, (b) the authority should not be vindictive or capricious (c) estimate should be bona fide. (viii) Good proof is not required while making an estimate provided the accounts are rightly rejected and estimate is fair and reasonable. (B.2) To justify the various additions made in the Assessment Order, the AO has also included detailed discussion in the Assessment Order in respect of the various additions made by him in the aforesaid or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed:- i. M/s Neelkanth Enterprises ii. M/s Jai Bhagwati Enterprises iii. M/s Mittal Timber Products Pvt. Ltd. iv. M/s Jyoti Enterprises v. M/s Keshav International vi. M/s Jyoti International Besides above, M/s Swaran Wood Products (I) Pvt. Ltd., in which assessee himself is a Director and majority shareholder , failed to furnish any reply despite the fact that the notice was served through registered post and it did not come back. The Hon ble Delhi High Court has held in the case of Commissioner of Income-tax, Delhi (Central)- III v. Yamu Industries Ltd. [2007] [2008] 167 TAXMAN 67 (DELHI), that where notice was sent by registered post at correct address of assessee had not been received back unserved within period of thirty days of its issuance, there was a presumption under law that said notice had been duly served upon assessee. Thus, the assessee not only deliberately failed to furnish the relevant information in his own case but also in the case of the company in which he is a Director. Assessee has shown debit balance of ₹ 45,29,191/- from M/s Swaran Wood Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to act on material which may not be accepted as evidence in a court of law; (iii) In clandestine transactions, it is impossible to have direct evidence or demonstrative proof of every move and when the assessee is not forthcoming with proper facts and chooses to be elusive and evasive, the AO has no choice but to take recourse to estimate. The only caveat is that it should be reasonable and based on material available on record. It should not be perverse or based merely on conjectures. (iv) There is no presumption in law that the AO is supposed to discharge an impossible burden to assess the tax liability by direct evidence only and to establish the evasion beyond doubt as in criminal proceedings. He can assessee on consideration of material available on record, surrounding circumstances, human conduct, preponderance of probabilities and nature of incriminating information/ evidence available on record; (v) As regards the burden of proof, if the AO comes across material indicating accrual or receipt of income in the hands of the assessee, he is empowered to investigate the matter and ask relevant questions. The AO s burden is initial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, 1961, are initiated for furnishing of inaccurate particulars of his income and concealment of income by the assessee. 7. UNEXPLAINED SUNDRY CREDITOR The assessee has claimed Sundry Creditor of ₹ 54,29,787/- in the Balance Sheet. Since, the assessee failed to furnish the name, address and confirmation of these Sundry Creditors, hence, the authenticity of the claim of Sundry Creditors remained unverified. Onus was on the assessee to establish the genuineness of these Sundry Creditors which the assessee failed to discharge. From the assessment folder of the assessee for the A.Y. 2008-09, address of one of Sundry Creditors - M/s Mittal Timbers Pvt. Ltd. was obtained and notice u/s 133(6) of the Income-tax act, 1961, was issued to this company but the notice came back unserved with postal remarks - left without address. From the perusal of the details of TDS/TCS deducted as per the information available in the ITD Systems, it has been observed that the Tax has been collected at source by the above company on total purchases of ₹ 3,87,37,975/- by the assessee. Though, TCS has been collected by the above company but that does not make the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition in capital of ₹ 44,32,000/-. The assessee has just mentioned in the balance sheet that the above amount has been transferred from his saving bank account. However, from the perusal of the reply submitted by the AR of the assessee vide letter dated 10.08.2011, it has been observed that the assessee failed to mention anything about the above saving bank account while listing his bank accounts. Thus, again the intention is obvious i.e. to avoid further scrutiny. As discussed above, it is a well settled legal position that the onus of establishing the source of any credit entry into the accounts of the assessee is on the assessee. Here , the action of the assessee by deliberately not mentioning any details about the saving bank accounts leads to only one conclusion that assessee does not want to furnish copy of bank statement to the assessing officer and he most certainly has something to hide. Under these circumstances, it is extremely logical and reasonable to believe that the source of the above addition in capital is unexplained. Thus, ₹ 44,32,000/- is treated as income from undisclosed sources. Penalty proceedings u/s 271(l)(c) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounting to ₹ 8,59,643/- is treated as unexplained investment u/s 69 of the Income-tax Act, 1961, and added to the total income of the assessee as income from undisclosed sources. Similarly, claim of depreciation amounting to ₹ 4,83,994/- is disallowed and added back to the total income as the assessee failed to furnish the evidence of any business use. Penalty proceedings u/s 271 (1 )(c) of the Income-tax Act, 1961, are initiated for furnishing of inaccurate particulars of his income and concealment of income by the assessee. 10. DEEMED DIVIDEND As mentioned above, the assessee has shown debit balance of ₹ 45,29,19l/- from M/s Swaran Wood Products (I) Pvt. Ltd. in which he himself is Director and majority shareholder. However, the assessee quite deliberately remained uncooperative , not only as an individual but also a Director in the above company, with a malafide intention, so the exact quantum of transactions between the assessee and the above company is not known. However, it is quite evident that there is no regular business transaction with the above company and above transactions are l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71,170 49,069 Since, the interest paid on housing loans cannot be qualified as expenditure incurred wholly and exclusively for the purpose of business as per the provision of section 37(1) of the4pt e-tax Act, 1961, hence, the above interest payments i.e. ₹ 1,20,239/- are disallowed and added back to the total income. Penalty proceedings u/s 27l(l)(c) of the Income-tax Act, 1961, are initiated for furnishing of inaccurate particulars of his income and concealment of income by the assessee. 12. INCOME FROM HOUSE PROEPRTY It has been observed that the assessee has taken two housing loans from Union Bank of India, for a residential house at A-313, Shivalik, Malviya Nagar, New Delhi. The details regarding the interest payments on the housing loan are given in the above paragraph. As mentioned above, in all the show-cause notices issued to the assessee , following explanation was specifically asked from the assessee:- It also appears that you have taken housing loan from the Union Bank of India keeping your property A-313, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputed as below: i. Annual value : ₹ 3,60,000/- ii. Less: Deduction (30%) : ₹ 1,08,000 iii. Less: Interest paid : ₹ 1,20,239/- Income from house property : ₹ 1,31,761/- Thus, income from house property is estimated at ₹ 1,31,761/-. Penalty Proceedings u/s 271(1)(c) of the Income-tax Act, 1961, are initiated for furnishing of inaccurate particulars of his income and concealment of income by the assessee. 13. EXPENSES OF PERSONAL NATURE The assessee has claimed expenses of ₹ 77,460/- on staff welfare, ₹ 5,330/- on vehicle maintenance, ₹ 55,590/- on conveyance and traveling and ₹ 66,195/- on sales promotion expenses. It is a matter of common knowledge that all these expenses have elements of personal nature. Thus, 10% of above expenses i.e. ₹ 12,712/- is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02/08/11 G.S. Kohli CA attended, case adjourned for 10/08/11 10/08/11 Partly detail filed. Case discussed and was asked to complete the reply of questionnaire letter. It could have admitted fact that the month of August was not the period of holding of speedy assessments. But simultaneously it could not be denied that the (A.O) might have ended the matter by giving the impression that the fresh notice would be served upon after 31st December, thus, in these circumstances the assessee is not to be treated as assessee in default. 2. Notice dated 24/03/11 for hearing on 08/04/11 It is not fair to say that the record does not reveal that on which date hard copy of Profit Loss Account was filed. The A.O. has also not given any comment that the proceedings u/s 271(1 )(b) vide notice dated 11/05/05 was also dropped where the written submission was placed on the record that the hard copy of Profit Loss Account had already been filed. It is evident that it was filed in compliance to the notice dated 24/03/11. 3. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proves the tendency of the assessee for lingering on the matter. It is humbly submitted that the assessee was not habitual. The earlier two immediate assessment year has also been completed u/s 143(3) where the assessee has fully co-operated. An adjournment was sought by giving the sufficient cause which was accepted by the A.O., thus, such remarks are morally wrong. ' 5. Notice dated 08/11/11 for hearing on 14/11/11 It is an admitted fact that due to short of time-gap in between service of notice and its hearing it could not be attended on the fixed date, however, it was attended on the next day and the impression was given that the fresh notice would be served 6. Notice dated 19/12/11 for its compliance on 22/12/11 Again the time-gap was short in between the date of notice and its hearing that it could not be attended on the fixed date. It was attended on the next date, but this time the appellant was not entertained and was told that an ex-parte order had been passed while as per the assessment order it were framed on 28/ 12/11. In the remand report dated 1.06.2012 the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted him in attending the A.O had also been placed on the record. The A.O. has also stated medical certificate provided by the assessee is merely related to headache and back ache, it does not prove that he was hospitalized was morally wrong. It is also quite admitted that headache and backache temporarily does not indicate any serious matter as stated by the A.O. But sometimes keeping in view the age of the appellant who is about 45 years not only the assessee, the entire family was in shock and disturbed and at the moment one must bear in mind that health is above all from all other matters. Further the contents in an affidavit as item no.4 along with documentary evidence that due to his ill-health the business was conducted in qr. ending 31st Dec, 2011 only to the tune of ₹ 79,436/- while for the corresponding period of the previous year it were amounting to ₹ 4,80,74,708/-, thus, it evidently proves that the entire activities of the humble appellant were freezed. III] It is submitted the sole purpose of judiciary as well as of the revenue is to get at the truth. There should be no objection to consider any evidence produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant has further contended that the Assessing Officer only reiterated the facts framed in assessment order to stand with its validity, such spirit is far off from the judiciary and natural law of justice as it is also held by Delhi High Court in the case of Commissioner of Income Tax vs. Virgin Securities Credits Pvt. Ltd. 332 ITR 396 The assessee produced requisite material before the Commissioner (Appeals) for the first time justifying the claims. The Commissioner (Appeals) called for a remand report from the Assessing Officer and thereafter deleted the addition and observed that the Assessing Officer in his remand report had not specifically commented upon the additional evidence submitted by the assessee. It is submitted that the sufficient cause placed before you along with documentary evidence that even the business of the appellant was freezed in qr. ending 31/12/11 it was conducted only ₹ 79,436/- as compared to corresponding period of the previous year where it were to the tune of ₹ 4,80,74,708/-. It evidently proves the sufficient cause which prevented him from attending the case otherwise there was no reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O. s order. c] Photocopy of Saving Account where the concerned payment have been highlighted to prove that it had been paid from the Saving Account by treating it as personal expenses, its disallowance u/s 37 was not justified. d] Photocopy of I. Card and Driving License to prove that it is self-occupied property (residential house) and thus the determination of annual value was not justified. E] Photocopy of Trading, Profit Loss Account for the year ending 31st March, 2009 and Balance Sheet on that date along with Audit Report on the prescribed Form 3CD for the audit held u/s 44AB of the Income Tax Act, 1961. 7. Explanation/ confirmation of the parties where the notice u/s 133(6) were uncompleted. M/s Neelkanth Enterprises M/s Mittal Timber Products Pvt. Ltd. M/s Jyoti Enterprises M/s Keshav International The explanation of other parties are given in the written submission on page 8 a] Photocopy receipts for filing of VAT returns (Sales Tax returns) along with its Summary for the financial year 2008-09 to prove that the declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative of the assessee strongly relied on the order of the Ld. CIT(A). He further relied on the Paper Book filed from the assessee s side during appellate proceedings in ITAT [already reproduced by us in the foregoing paragraph (C.1)]. He also placed reliance on judicial precedents considered by Ld. CIT(A) in her impugned Order. (C.2) We have heard both sides patiently. We have also carefully perused the materials on records. We have considered judicial precedents referred to in the records or brought to our attention at the time of hearing before us. The statutory provisions regarding admission of Additional Evidence by Commissioner of Income (Appeals) are contained in Rule 46A of I.T. Rules, and are reproduced below for ease of reference: 46(A). (1) the appellant shall not be entitled to produce before the [Deputy Commissioner of (Appeals) [or, as the case may be 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) whether the [Assessing Officer] has refused to ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, . To render justice being the sole purpose of judiciary is the other reason cited by Ld. CIT(A) for admission of Additional Evidences. We must add here that justice is to be rendered in accordance with law and not in contravention of law. The law in relation to admission of Additional Evidences, as contained is Rule 46A of I.T. Rules has already been reproduced in foregoing paragraph (C.2) of this order. The circumstances under which Ld. CIT(A) may admit Additional Evidences have been exhaustively listed in clauses (a), (b), (c) and (d) of Rule 46A(1) of I.T. Rules. However, on perusal of the impugned order of Ld. CIT(A) we find that she has nowhere commented which of the aforesaid clauses of Rule 46A(1) of I.T. Rules were applicable in the instant case. Moreover, we find that under Rule 46A(3) of I.T. Rules, the Ld. CIT(A) is duty bound, once the Ld. CIT(A) admits the Additional Evidences, to allow a reasonable opportunity to the AO, as per clauses (a) and (b) of Rule 46A(3) of I.T. Rules. However, after admitting the Additional Evidences, Ld. CIT(A) failed to provide such opportunity to the AO as has been prescribed under Rule 46A(3) of I.T. Rules. After commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r can do and can direct the Assessing Officer to do what he has failed to do, as held by the Supreme Court in the case of CIT v. Kanpur Coal Syndicate , [1964] 53 ITR 225 , but in this case, the CIT (A) did not exercise this right. This power, which is recognized in sub-Section (4) of section 250, has to be exercised by the CIT (A) and there should be material on record to show that he, while disposing of the appeal, had directed further enquiry and called for the confirmation letters from the assessee even in respect of receipt of monies from customers by way of cheques. Rule 46A is a provision in the Income Tax Rules, 1962 which is invoked, on the other hand, by the assessee who is in an appeal before the CIT (A). Once the assessee invokes Rule 46A and prays for admission of additional evidence before the CIT (A), then the procedure prescribed in the said rule has to be scrupulously followed. The fact that sub-Section (4) of Section 250 confers powers on the CIT (A) to conduct an enquiry as he thinks fit, while disposing of the appeal, cannot be relied upon to contend that the procedural requirements of Rule 46A need not be complied with. If such a plea of the assessee is accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 refused to admit evidence which ought to have been admitted ; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the [Assessing Officer] ; or (c) where the appellant was prevented by sufficient cause from producing before the [Assessing Officer] any evidence which is relevant to any ground of appeal ; or (d) where the [Assessing Officer] has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. (2) No evidence shall be admitted under sub-rule (1) unless the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] records in writing the reasons for its admission. (3) The [Deputy Commissioner (Appeals)] [or, as the case may be, the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the additional evidence. Thus, the requirement of sub-rules (1) and (2) of Rule 46A have been complied with. However, sub-rule (3) which interdicts the CIT (A) from taking into account any evidence produced for the first time before him unless the Assessing Officer has had a reasonable opportunity of examining the evidence and rebut the same, has not been complied with. There is nothing in the order of the CIT (A) to show that the Assessing Officer was confronted with the confirmation letters received by the assessee from the customers who paid the amounts by cheques and asked for comments. Thus, the end result has been that additional evidence was admitted and accepted as genuine without the Assessing Officer furnishing his comments and without verification. Since this is an indispensable requirement, we are of the view that the Tribunal ought to have restored the matter to the CIT (A) with the direction to him to comply with sub-rule (3) of Rule 46A. In our opinion and with respect, the error committed by the Tribunal is that it proceeded to mix up the powers of the CIT (A) under sub-section (4) of Section 250 with the powers vested in him under Rule 46A. The Tribunal seems t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) as First Appellate Authority are coterminous power over the sources of income constituting the subject matter of the assessment, except the power to touch new sources of income not considered by the Assessing Officer. The Jurisdictional High Court has held that the CIT(A) can also do and can direct the Assessing Officer to do what he has failed to do, as held by the Supreme Court in the case of CIT v. Kanpur Coal Syndicate[1964] 53 ITR 225. The Hon'ble Court found that the CIT (A) in the facts before the Court which fact is evident from the facts of the present case also that the CIT(A) did not exercise the powers recognized in sub-Section (4) of section 250 and has to be exercised by the CIT (A). The Hon'ble Court has held that in order to show that the power under Sub-section (4) to section 250 is being exercised there should be material on record to show that while disposing of the appeal, the CIT(A) had directed further enquiry and called for the confirmation letters from the assessee even in respect of receipt of monies from customers by way of cheques. Rule 46A, it was observed was a provision in the Income Tax Rules, 1962 which is invoked, on the other hand, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are naturally intended to be over without unnecessary delay, and so, it is the duty of the parties, both the department and the assessee, to lead all their evidence at the stage when the matter is in charge of the Income-tax Officer. It was held by the Jurisdictional High Court that it is for the said reason that Rule 46A starts in a negative manner by saying that an appellant before the CIT (A) shall not be entitled to produce before him any evidence, whether oral or documentary, other than the evidence placed by him before the assessing officer. Their Lordships held that after making the said general statement, which was found to be in consonance with the principle stated in the aforesaid judgment of the Apex Court, exceptions have been carved out setting out under what circumstances it would be open to the CIT (A) to admit additional evidence. The Court held that additional evidence can only then be produced at the first appellate stage when conditions stipulated in the Rule 46A are satisfied and a finding is recorded to that extent which makes it clear in unambiguous language that firstly the conditions prescribed in Rule 46A must be shown to exist before additional evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew that the Tribunal ought to have restored the matter to the CIT (A) with the direction to him to comply with sub-rule (3) of Rule 46A. In our opinion and with respect, the error committed by the Tribunal is that it proceeded to mix up the powers of the CIT (A) under sub- section (4) of Section 250 with the powers vested in him under Rule 46A. Commenting upon the order of the ITAT their Lordships further held that the Tribunal erred in its interpretation of the provisions of Rule 46A vis- vis Section 250(4). Its view that since in any case the CIT (A), by virtue of his conterminous powers over the assessment order, was empowered to call for any document or make any further enquiry as he thinks fit, there was no violation of Rule 46A is erroneous. The Tribunal appears to have not appreciated the distinction between the two provisions. If the view of the Tribunal is accepted, it would make Rule 46A otiose and it would open up the possibility of the assessees' contending that any additional evidence sought to be introduced by them before the CIT (A) cannot be subjected to the conditions prescribed in Rule 46A because in any case the CIT (A) is vested with conterminous powers ov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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