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TMI Blog1986 (6) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... available in stock of the assessee would come to 2,09,08,940 biris. As the sales of these biris could not be accounted for from the books of account it was held by the assessing authority that the assessee made these sales out of concealed income/stock of the addition, it was argued, should have been upheld. It was further argued that the Commissioner (Appeals), while giving relief has admitted new evidence filed before him and has considered the new evidence while giving relief. It was argued that the Commissioner (Appeals) acting against the provisions of rule 46A of the Income-tax Rules, 1962 ('the Rules') reads as under: "Production of additional evidence before the Appellate Assistant Commissioner and Commissioner (Appeals).---(1) The appellant shall not be entitled to produce before the Appellate Assistant Commissioner 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 Income-tax Officer, except in the following circumstances, namely:--- (a) where the Income-tax Officer has refused to admit evidence which ought to have been admitted ; or (b) wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock account by the assessing authority. Further entries in the books of account were there, which explained everything. The tobacco of the assessee being in short supply, the assessee was receiving advances even before the despatch of biris and thus, the advances were included in sales though the supply of biris to them was made later. The Commissioner (Appeals) has clearly mentioned all these facts, which were confirmed by the certificates filed in this connection from seven customers of the assessee who had purchased biris. As far as the plea of admission of new evidence is concerned, it was argued that the ITO was present before the Commissioner (Appeals) at the time of hearing of the appeal and hence it could not be said that opportunity of hearing was not given to department. 9. We have given our due consideration to the rival viewpoints and the facts of the case. The Commissioner (Appeals) has mentioned in this connection in paragraph 6 of his appellate order as under : "Now the appellant's representative has brought to my notice that this sort of a wrong resumption had also been made the basis for an adverse inference against the appellant for the assessment year 1972- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o produce any evidence in rebuttal. It is true that the ITO was present at the time of hearing of the appeal, but in our opinion, that alone would not amount to giving of reasonable opportunity to the assessing authority as required under rule 46A(3). The assessing authority did not know in advance that new evidence would be produced and would be admitted for consideration so that he could be ready to examine the new evidence or to produce any evidence in rebuttal. We, therefore, hold that the Commissioner (Appeals) committed contravention of provisions of rule 46A. The order of the Commissioner (Appeals) on this issue, therefore, cannot be upheld. The finding of the Commissioner (Appeals) on this issue is set aside to be passed afresh after giving reasonable opportunity to the assessing authority as required under the law. 10. The next contention of the revenue is that the Commissioner (Appeals) was not justified in deleting the addition of Rs. 5,16,279 added on account of unverifiable and alleged excessive claim for expenses on wrapper, label and labelling. It was argued by the representative on behalf of the department that the expenses under these heads claimed by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esses were got done through the contractors but during this year, the assessee decided to get the labelling and wrapping work done by themselves and on this account, the assessee stopped supplying these materials to get the work done from the contractors. As the assessee had to do these works by itself, the expenses under these heads had to be insured in the hands of the assessee, which in the earlier years were covered in the charges of the contractors to whom this work was entrusted. This made the whole of the difference. It was thus argued that the figure of earlier years were not comparable at all, as the method of the assessee had undergone a change in this year. As far as the admission of new evidence is concerned, it was argued that the ITO was present at the time of hearing of appeal and hence it could not be said that the reasonable opportunity of hearing was not given to the revenue. 12. We have looked into the facts and have considered the rival viewpoints. It is clear that the Commissioner (Appeals) admitted a vital evidence in the shape of certificate from Hind Tobacco Co. before deleting the disputed addition. The Commissioner (Appeals), however, has not recorded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... originally charged from the contractors while supplying tobacco. Thus, the part of the purchase price, which the assessee has to pay to the contractors as the price of tobacco would be the same as the assessee had charged from the contractors at the time of supplying tobacco to them. If the assessee charged at a lesser rate, the assessee would get the biri in which the price of tobacco charged would be the same and it would not make any difference as far as the assessee's profit is concerned. Moreover, the quantity of tobacco supplied to the contractors was not fully consumed by the contractors and some tobacco was left with them out of tobacco supplied. The shortfall was on this account that the tobacco which was supplied to the contractors towards the end of the year would remain with the contractors for manufacture and supply which would be coming to the assessee in the following year. In this connection, certificate of Hind Tobacco Co. was filed before the Commissioner (Appeals). As far as the admission of new evidence is concerned, it was argued that the ITO was present at the time of hearing before the Commissioner (Appeals) and thus, he got an opportunity of hearing. 18. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals), after accepting the new piece of evidence filed before him for the first time, namely, affidavit of Shri Vishwa Nath Singh. This affidavit was not filed before the assessing authority at all. The Commissioner (Appeals) has committed contravention of the provisions of rule 46A. In this connection, as has been done by him in connection with the other new evidences admitted by him (mentioned above in this order). It is thus argued that this part of the Commissioner (Appeals) is liable to be set aside on this account. As far as the other three cash credits are concerned, it is argued that the orders of the Commissioner (Appeals) for the earlier years, namely, 1972-73 and 1973-74, are still sub judice before the Tribunal and his findings in those years should not be taken to be final till the same is finally decided by the Tribunal. 23. The learned representative of the assessee argued that the cash credits in the names of Shri Janki Saran Mishra, Shri Jai Narain Singh and Shri Abdul Majeed are fully explained out of withdrawals made by them in the earlier years. They had deposited similar amounts in the previous year relevant to the assessment years 1972-73/1973-74 and wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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