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TMI Blog2007 (3) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction and powers of the learned CIT(A). The learned CIT(A) could have confronted the Assessing Officer with the evidence thus received and the material thus gathered and allow the Assessing Officer to have his say in the matter and perhaps had he done so this dispute would not have arisen. But we do not see any requirement in law that the first appellate authority should invariably consult or confront the Assessing Officer every time an additional evidence that was not before the Assessing Officer comes on the record of the first appellate authority. Where the additional evidence is obtained by the first appellate authority on its own motion, there is no requirement in law to consult/confront the Assessing Officer with such additional evidence. There may be cases where additional evidence is admitted by the first appellate authority on a request or application being made by the assessee. In such cases sub-rule (2) of rule 46A requires the first appellate authority to allow the Assessing Officer a further opportunity to rebut the fresh evidence filed by the assessee. Even that requirement cannot be said to be a rule of universal application. If the additional evidence furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipts as per T.D.S. certificates as the assessee's income. On the assessee's appeal learned CIT(A) carried out proceedings under section 250(4) of the Act. He called for elaborate details of accounts where the freight income was recorded. He also called for the records pertaining to parties who supplied trucks for transporting consignments for Ramco Industries Ltd. The assessee was also asked to file confirmation letters or certificates from the truck owners and reconcile the same with the freight account and the commission amount. Learned CIT(A) has observed that the assessee by and large complied with the requirements and on detailed examination of the matter the assessee's explanation was found to be justified. He therefore deleted the additions made by the learned Assessing Officer based on the gross amounts shown in the TDS certificates issued by M/s. Ramco Industries Ltd. 3. During the course of hearing before us the learned departmental representative strongly objected to the impugned order on the ground that it had been made in violation of the provisions of rule 46A of the Act as well as principles of natural justice that required the learned CIT(A) to confront the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority to make such further enquiry as he thinks fit or to direct the Assessing Officer to make further enquiry and report the result of the same. The provisions of section 250(4) are the provisions of long standing that existed under 1922 Act also in section 31 of that Act. In the case of CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC), the Hon'ble Supreme Court have held that the first appellate authority can do what the Assessing Officer could do and can also direct the latter to do what the latter has failed to do. In the case of Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688 (SC) and in the case of CIT v. Nirbheram Daluram [1997] 224 ITR 610 (SC) the Hon'ble Supreme Court have held that the powers of the first appellate authority over an assessment are all pervasive and they are not confined to the matters considered by the Assessing Officer. There are many judgments to the effect that in view of the provisions of section 250(4), the first appellate authority is duty bound to make an enquiry even if such enquiry was not made by the Assessing Officer if the facts and circumstances of the case warrant such an enquiry to be made. Reference in this regard may be made to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4] 265 ITR 217. Hon'ble High Court held that the provisions of sub-rule (4) of rule 46A laid down that the powers of the appellate authority under section 250 was not affected. The Hon'ble Kerala High Court further observed "On a consideration of the provisions of rule 46A particularly sub-rule (4) thereof and the provisions of section 250(1) of the Income-tax Act conferring power on the Commissioner of Income-tax (Appeals), we are also of the view that in spite of the provisions of rule 46A(1), the provisions of section 250 enable the Commissioner of Income-tax (Appeals) to accept additional evidence in appropriate cases which power has been preserved by sub-rule (4) of rule 46A also. If the provisions of rule 46A, sub-rule (4) thereof, are held to be mandatory that will go against the provisions of section 250 of the Act conferring power on the first appellate authority to enquire into the matter and pass appropriate orders. In other words, rule 46A without sub-rule (4) will be open to challenge as ultra vires section 250 of the Act." 9. There are of course several judgments where it has clearly been laid down that the assessee on his own cannot produce any additional evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate cases but admission of evidence at the instance of an appellant without any ground or explanation would not be exercising discretion properly and in such a case the appellate authority is competent, in our opinion, to interfere with the discretion exercised by the Appellate Assistant Commissioner. Reliance in this connection may be placed on the observations in the case of Ramgapal Ganpatrai Sans Ltd v. Commissioner of Excess Profits Tax, in the case of Byramji Co. v. Commissioner of Income-tax and in the case of Karamchand v. Commissioner of Income-tax." 10. In the case of CIT v. Valimohmed Ahmedbhai [1982] 134 ITR 214 Hon'ble Gujarat High Court have held that if any additional evidence submitted by an assessee is accepted behind the back of the Assessing Officer and the Assessing Officer is not given proper opportunity to rebut the same, it would amount to the violation of the principles of natural justice. Hon'ble Gujarat High Court observed:- "It is clear from the above quoted provision that the AAC should not have taken into account any evidence produced under sub-rule (1) unless the ITO had been allowed a reasonable opportunity to examine the evidence or to cross exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inarily, the appeal would be decided on the evidence recorded in the course of assessment proceedings. The ITO, therefore, may not, in a given case, think it necessary to remain present at the hearing of the appeal. He, however, cannot be expected to anticipate that additional evidence might be produced by the assessee in his appeal. It is for this reason that it is necessary to give him an opportunity to meet the additional evidence. The Tribunal has, therefore, fallen into an error in rejecting the plea of the revenue that the AAC ought to have given an opportunity to the ITO to examine the additional evidence or to cross examine the witnesses whose evidence was taken on record or to rebut the additional evidence. We, therefore, answer the question referred to us in the negative and against the assessee." 11. The proposition that the first appellate authority can admit additional evidence sought to be filed by an assessee only for good reasons and after allowing the Assessing Officer reasonable opportunity to have his say in the matter is supported by some more judgments such as CIT v. Babulal Jain [1989] 176 ITR 411 (MP); C. Unnikrishnan v. CIT [1998] 233 ITR 485 (Ker.) and Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Officer. He can do what the Income-tax Officer can do. He can also direct the Income-tax Officer to do what he failed to do. The power conferred on the Appellate Assistant Commissioner under sub-section (4) of section 250 being a quasi-judicial power, it is incumbent on him to exercise the same if the facts and circumstances justify. If the Appellate Assistant Commissioner fails to exercise his discretion judicially, and arbitrarily refuses to make enquiry in a case where the facts and circumstances so demand, his action would be open for correction by a higher authority." Thereafter the Hon'ble High Court again observed at page 8 in the following words: "On a conjoint reading of section 250 of the Act and rule 46A of the Rules, it is clear that the restrictions placed on the appellant to produce evidence do not affect the powers of the Appellate Assistant Commissioner under sub-section (4) of section 250 of the Act. The purpose of rule 46A appears to be to ensure that evidence is primarily led before the Income-tax Officer." 13. From the various authorities cited by us in this order we find that the legal position is that the first appellate authority has wide powers o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law that the first appellate authority should invariably consult or confront the Assessing Officer every time an additional evidence that was not before the Assessing Officer comes on the record of the first appellate authority. Where the additional evidence is obtained by the first appellate authority on its own motion, there is no requirement in law to consult/confront the Assessing Officer with such additional evidence. There may be cases where additional evidence is admitted by the first appellate authority on a request or application being made by the assessee. In such cases sub-rule (2) of rule 46A requires the first appellate authority to allow the Assessing Officer a further opportunity to rebut the fresh evidence filed by the assessee. Even that requirement cannot be said to be a rule of universal application. If the additional evidence furnished by the assessee before the appellate authority is in the nature of clinching evidence leaving no further room for any doubt or controversy in such a case no useful purpose would be served on performing the ritual of forwarding the evidence/material to the Assessing Officer and obtain his report. In such exceptional circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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