BAI KANBAI WD/O SETH PADAMSI DHANJI CHARITABLE TRUST,MUMBA vs. ITO (EXEM) WARD 1(1), MUMBAI

That the Ld. NaFAC has failed to adjudicate any of the grounds of appeal and has not addressed the issues on their merits.

Prat the Ld. NaFAC has violated the principles of natural justice by failing to provide a reasonable opportunity of being heard to the appellant.

That whether Learned Assessing Officer (Ld. AO) was right in ignoring the submission made on 05/12/2019 and passing the order on 07/12/2019 stating that no compliance has been made against the show cause notice by the Appellant?

That whether Ld. AO and Ld. NaFAC was right in ignoring the submission made by the Appellant before them and passing the order in arbitrary manner and without application of mind? Due to the such approach in adjudicating the matter, the genuine taxpayer suffers unwarranted long drawn litigation and erroneous tax demands especially when Appellant being the Charitable Institution.”

Briefly stated, the facts of the case are that the assessee filed its return of income electronically on 25th October 2017, declaring a total income of 3 Bai Kanbai Wd/o Seth Padamsi Dhanji Charitable Trust

1 In the first appeal, the learned Commissioner of Income-tax (Appeals) [“Ld. CIT(A)”] dismissed the appeal in-limine, declining to adjudicate the issue on merits on the ground that the assessee failed to comply with Rule 46A of the Income-tax Rules, 1962 (“the Rules”), in respect of certain documents furnished during appellate proceedings. Aggrieved, the assessee is now before this Income-tax Appellate Tribunal (in short the ‘Tribunal’) by way of grounds as reproduced above.

Before us the Ld. Counsel for the Assessee filed a paper book containing pages 1 – 112. 4. We have heard the rival submissions of the parties and perused the relevant material on record. Ground No. 1, 4 Bai Kanbai Wd/o Seth Padamsi Dhanji Charitable Trust which goes to the root of the matter, challenges the dismissal of the appeal by the Ld. CIT(A) for alleged non-compliance of procedure provided under Rule 46A of the Rules. The Ld. CIT(A), in paragraph 5 of the impugned order, has observed that the assessee submitted two documents before him, namely, (i) tenancy agreement for Room No. 11; and (ii) tenancy agreement for Room No. 10. According to the Ld. CIT(A), both documents constituted “additional evidence” within the meaning of Rule 46A, and since the assessee had not formally invoked Rule 46A or demonstrated circumstances warranting its application, the appeal was rejected without adjudicating the merits. 4.1 However, the assessee has brought to our notice material which goes to the foundation of the conclusion reached by the Ld. CIT(A). The learned counsel drew our attention to page 11 of the paper book, containing a show-cause notice dated 1st December 2019 issued by the Assessing Officer, specifically calling for explanation and supporting documents relating to Room Nos. 10 and 11, for hearing scheduled on 5th December 2019. 5 Bai Kanbai Wd/o Seth Padamsi Dhanji Charitable Trust

2 Further, reference was invited to page 16 of the paper book, being an authenticated acknowledgment showing that the assessee uploaded the tenancy agreements of both rooms on 5 December 2019 itself, i.e., the very date fixed for hearing before the Assessing Officer. These submissions remain uncontroverted by any material to the contrary. 4.3 It is, therefore, evident that the documents in question were already placed before the Assessing Officer during assessment proceedings. The mere fact that the Assessing Officer, for reasons best known to him, ignored the material so filed and proceeded to finalize the assessment two days later, cannot render such evidence as “additional evidence” under Rule 46A. 4.4 The law is well-settled that evidence already on record of the Assessing Officer cannot be regarded as additional evidence under Rule 46A merely because the authority failed to consider it. An appellate authority is not empowered to shut out relevant material which was already before the original authority but not considered by it. The first appellate authority, being a quasi- judicial body, is required to adjudicate the appeal on merits and cannot dismiss it mechanically on 6 Bai Kanbai Wd/o Seth Padamsi Dhanji Charitable Trust procedural grounds when the evidence was already part of the assessment record. 4.5 In the present case, the finding of the Ld. CIT(A) that Rule 46A was attracted is thus patently erroneous. The dismissal of the appeal on that ground, without considering the issues on merits, is contrary to the scheme of the Act and principles of natural justice. 4.6 In view of the foregoing discussion, we hold that the Ld. CIT(A) erred in declining to admit and examine the evidence on the mistaken premise that the assessee had furnished “additional evidence”. As the documents were already filed before the Assessing Officer during the assessment proceedings, Rule 46A had no application. 4.7 Accordingly, the impugned order of the Ld. CIT(A), to the extent it dismisses the appeal without adjudication on merits, is set aside. The matter is restored to the file of the Ld. CIT(A) with a direction to examine the evidence already on record, afford due opportunity to the assessee, and decide the appeal afresh on its merits in accordance with law. Ground No. 1 is allowed. 7 Bai Kanbai Wd/o Seth Padamsi Dhanji Charitable Trust

Since the matter has been remanded to the Ld. CIT(A), adjudication of the remaining grounds will serve no useful purpose and is, therefore, left open. 6. In the result, appeal of the Assessee is allowed for statistical purposes.