RAM SWAROOP SHARMA vs. DY COMMISSIONER OF I T CIRCLE SIKAR

By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the assessee.

This court while admitting the appeal on 10.01.2017, framed the following substantial questions of law:- “ Whether under the facts and circumstances of the case the Ld. ITAT has erred in law in rejecting the application filed by the Appellant under Rule 29 of the ITAT Rules 1963 without appreciating that such application for bringing additional evidence on record was not only substantial and material but also in the interest of justice? Whether under the facts and circumstances of the case and in law the Ld. ITAT is reasonable and justifies in not allowing relief to the Appellant by way of exemption on payment of tax for the sale of agricultural land, not being a capital asset under Section 2(14) of the Income Tax Act though the Appellant has not claimed it before the LD. Assessing Officer or CIT (Appeals) as under Articles 265 of the Constitution of India no taxation can be levied

Counsel for the appellant contended that Rules 11 and 29 of the Income-tax (Appellate Tribunal) Rules, 1963 provides as under:- “11. Grounds which may be taken in appeal The appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule: Provided that the Tribunal shall not rest its decision on any other ground unless the party to who may be affected thereby has had a sufficient opportunity of being heard on that ground.

Production of additional evidence before the Tribunal The parties to the appeal shall not be entitled to produce any evidence either oral or documentary before the Tribunal, but if the Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them, or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced.”

Counsel for the appellant has strongly relied upon following decisions:

Goetze (India) Ltd. Vs. CIT 284 ITR 323, observed as under:- “It was held by the Hon’ble Apex Court “ though a claim can be made before the AO by filing the revised return and not by the way of a letter, it does not impinge the power of the ITAT u/s 254 of the IT Act to decide such claim”

Mayank Poddar vs. WTO 262 ITR 633, 636, 637 (CAL.), observed as under:- “It has been held that: The subject is not to be taxed unless the charging section clearly imposes the obligation. Equally important is the rule of construction that if the words of a statute are precise and unambiguous, they must be accepted as declaring the express intentions of the legislature. A property, which is not otherwise taxable, cannot become taxable because of misunderstanding or wrong understanding of law by the assessee or because of his admission or on his misapprehension. If in law an item is not taxable, no amount of admission or misapprehension can make it taxable.”

Sail DSP VR Employees Association vs. Union of India 262 ITR 638 (CAL.), observed as under:- “It was held that : What is not otherwise taxable cannot become taxable because of the admission of the assessee. Nor can there by any waiver of the right otherwise admissible to the assessee in law. The chargeability is not dependent on admission of or waiver by the assessee. Chargeability is dependent on the charging section. Which needs to be strictly constituted.”

Commissioner of Income Tax Vs. Text Hundred India (P) Ltd, (2013) 351 ITR 0057, observed as under:- “As per the language of r. 29 of ITAT Rules, parties are not entitled to produce such additional evidence. It is only when the Tribunal requires such additional evidence in the form of any document or affidavit or (4 of 7) [ITA-107/2015] examination of a witness or through a witness it would call for the same or direct any affidavit to be filed, that too in the following circumstances : (a) when the Tribunal feels that it is necessary to enable it to pass orders; or (b) for any substantial cause; or (c) where the IT authorities did not provide sufficient opportunity to the assessee to adduce evidence. Discretion lies with the Tribunal to admit additional evidence in the interest of justice once the Tribunal affirms the opinion that doing so would be necessary for proper adjudication of the matter. This can be done even when application is filed by one of the parties to the appeal and it need not to be a suo motu action of the Tribunal. The aforesaid rule is made enabling the Tribunal to admit the additional evidence in its discretion if the Tribunal holds the view that such additional evidence would be necessary to do substantial justice in the matter. It is well-settled tha the procedure is handmaid of justice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence at the appropriate stage. Once it is found that the party intending to lead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect.”

R.S.S. Shanmugam Pillai & Sons Vs. CIT (1974) 95 ITR 109 (MAD), observed as under:- “It is no doubt true that the Tribunal has got a discretion either to admit the documents as additional evidence or to reject the same at the stage of the appeal. Bu the said discretion cannot be exercised in an arbitrary manner. If the Tribunal finds that the documents filed are quite relevant for the purpose of deciding the issue before it, it would be well within its powers to admit the evidence, consider the same or remit the matter to the lower authorities for the purpose of finding out the genuineness of the letters and considering the relevancy of the same. But if the Tribunal finds that the evidence adduced at the stage of the appeal is not quite relevant or that it is not necessary for the proper disposal of the appeal before it, in that case, the Tribunal could straightaway reject the evidence, which was sought to be produced for the first time at (5 of 7) [ITA-107/2015] the stage of the appeal.”

R. Dalmia vs. Commissioner of Oncome Tax (1978) 113 ITR 0522, observed as under:- “Appeal (Tribunal)- Remand for purposes of additional evidence-Validity-Tribunal was justified in remanding matter to AAC for purposes of taking additional evidence regarding genuineness of cash credit.”

Commissioner of Income Tax vs. Delhi Sanitary Stores (1981) 127 ITR 0822 RajHC, observed as under:- “Appeal (Tribunal)-Additional evidence- Authority to allow new question to be raised for the first time has been granted to the Tribunal – It is in the interest of justice to permit such question which can be decided on the facts already on record- Tribunal has jurisdiction to grant relief on a ground different from that urged before the lower authorities- A new plea after taking fresh evidence can also be allowed.”

Mewar Sugar Mills Ltd. vs. Commissioner of Income Tax (1994) 119 CTR 0161 RajHC, observed as under:- “It is in the discretion of the Tribunal to allow additional ground, provided other party is given an opportunity of hearing.”

K. Venkataramaiah vs. A. Seetharama Reddy AIR 1963 SC 1526, observed as under:- “ It was held that under r. 27(1) of order 41 of the CPC, the appellate Court has the power to allow additional evidence not only if it requires such evidence ‘to enable it to pronounce judgment’, but also for ‘any other substantial cause’. There might will be c cases where even though the Court found that it was able to pronounce judgment on the state of record as it was, and so it could not strictly say that it required additional evidence to enable it to pronounce judgment, it still considered that in the interest of justice something which remained obscure should be filled up so that it could procedure its judgment in a more satisfactory manner. Such a case would be one for allowing additional evidence for any other substantial cause under r. 27(1)(b) of order 41 of the Code.”

Arjan Singh Vs. Kartar Singh AIR 1951 SC 193, observed as under:- “The legitimate occasion for the application of order 41,r. 27 is when on examining the evidence as it stands, some inherent lacuna or defect becomes apparent, not where a discovery is made to impart it. The true test, therefore, is whether the appellate Court is able to pronounce judgment on the materials before it without taking into consideration the additional evidence sought to be adduced.” and more particularly the last decision in National Thermal Power Co. Ltd. vs. Commissioner of Income Tax - (1998) 229 ITR 383, wherein it has been observed as under:

Counsel for respondent has submitted that the Tribunal rejected the application since a contrary stand wastaken by the AO.

We have heard arguments of both the parties.

In view of well settled provisions of law, the matter is required to be remitted back to the Tribunal. Learned Tribunal will pass appropriate order after taking into consideration the law referred by us and will hear the appeal on merits and if required remit back to the AO for appropriate order.

The appeal stands disposed of. (VIJAY KUMAR VYAS)J. (K.S.JHAVERI)J. Chouhna/69