HASBRO SA,SWITZERLAND vs. DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAX), CIRCLE 1(1)(1), DELHI, NEW DELHI

We have heard the ld. AR for the Assessee and Ld. Sr. DR for the revenue. The Ld. AR for the assessee stated that the assessee has moved an application for admitting the additional evidence under Rule 29 of the Income Tax (Appellate Tribunal) Rules 1963 (ITAT rules). The said additional evidence has been annexed as Annexure A, B and C with the application wherein the copy of invoice raised by the assessee, financial statement of Hasbro India Toys Pvt. Ltd. (‘HITPL’) who has deducted the TDS in the F.Y. 2019-20 and TDS on 31st March, 2020 relevant to A.Y. 2020-21. It is stated that the said additional evidence could not be filed before the Ld. CIT(A) who did not provide opportunity to substantiate that income belongs to A.Y. 2020- 21 and the additional evidence clearly indicate that income belongs to A.Y. 2020-21. It is therefore, prayed that the additional evidence be admitted and matter may be restored to the file of the AO for deciding afresh.

The Ld. DR on the other hand opposed to the filing of the Additional evidence stating that no such opportunity was availed by the assessee Hasbro SA, Switzerland before the AO or before the Ld. CIT(A) at the appropriate time and no reasons are given for non-filing of the additional evidence even before the Ld. CIT(A) in the first appeal and Ld. DR, on behalf of the revenue, has therefore, opposed to admit the additional evidence under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963.

We have considered the rival submissions and have perused the order of Dated 05.06.2024 of the Hon’ble Mumbai Tribunal under identical issue of additional evidence was decided. The relevant part of this order is extracted as under:

“ 19.The assessee/appellant has sought permission of the additional evidence under Rule 29 of Appellate Tribunal Rules, 1963. Therefore, let us examine the Rule 29 of the Appellate Tribunal Rules, 1963. “Production of additional evidence before the Tribunal: - 29. The parties to the appeal shall not be entitled to produce additional 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.”

In support of their application, the assessee/appellant has relied the judgment of the Hon’ble Bombay High Court reported as Smt. Prabhavati S. Shah Vs. Commissioner of Income Tax, (1998) 231 ITR 1. Para 9 of the judgment of the Hon’ble Bombay High Court referred (supra) is relevant and reproduced as under: 5 Hasbro SA, Switzerland “9. We are also of the opinion that in the facts and circumstances of this case, even under rule 46A of the Rules the assessee should have been allowed to producethe additional evidence. The Appellate Assistant Commissioner, in our view, was not correct in holding that the case of the assessee did not fall in any of the four exceptions set out in sub-rule (1) of rule 46A. In fact, the present case would fall under clause (c) of subrule (1) of rule 46A because the assessee had no occasion to collect this evidence earlier. He could have reasonably expected that the creditors will appear before the Income-tax Officer in compliance with the summons issued by him. He was never informed by the Income-tax Officer that the creditors were not available or unidentifiable. If he had been informed by the Income-tax Officer in the course of assessment proceedings that he was not inclined to accept the loans as genuine because of the nonavailability of the creditors, he could have tried to satisfy him about the genuineness of the loan by producing other evidence. At the time of hearing of the appeal, the appellant tried to satisfy the Appellate Assistant Commissioner about the genuineness of one of the loans by producing material which he could collect in the meantime. This case, therefore, will fall under clause (c) of sub-rule (1) of rule 46A of the Rules. In any view of the matter, we are of the opinion that in the instant case, the Appellate Assistant Commissioner should have considered the evidence produced by the assessee in regard to the loan of Rs. 40,000 from Champaklal Dalpatrai. In view of the above, we answer question No. 3 in the negative and in favour of the assessee. In view of the above answer to question No. 3, questions Nos. 1 and 2 need not be answered.” 21.The Hon’ble High Court of Karnataka in of 2018, M/s. Google India Private Ltd. Vs. The Commissioner of Income Tax, order dated 17.04.2021 has been pleased to hold that if additional evidence is to be considered and allowed by the Tribunal, the parties to the proceedings or the affected party should be well aware of the said material/additional evidence, before the same is considered by the Hon’ble Tribunal. Para 19 of the judgement of the Hon’ble High Court of Karnataka in ITA No. 506 of 2018 referred (supra) is relevant and reproduced as under: “19. In the considered opinion of this Court, keeping in view Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 and also keeping in view the fact that the material on the basis of which the order has been passed was not furnished to the appellant at any point time, the order passed by the Tribunal is certainly violative of principles of natural 6 Hasbro SA, Switzerland justice and fair play as the appellant was not afforded an opportunity to rebut fresh evidence especially when such evidence was based on Google study.”

We have examined the contents of the application for additional evidence to find out the reasons for not producing the said evidence before the Lower Authorities. It is stated in the application is as under: - “The present application has been filed under Rule 29 of the ITAT Rules for admission of additional evidence in the above-mentioned appeal coming up for hearing before your Honors on 14 January 2026. The present appeal was filed against the order dated 01 February 2025 passed under Section 250 of the Income-tax Act, 1961 ('the Act') by the Ld. CIT(A) for AY 2020-21. The Ld. CIT(A) upheld additions made in the order dated 15 June 2024 passed under section 154 read with 143(1) of the Act ('Order') by the Deputy Director of Income-tax, Centralized Processing Centre (CPC), Bangalore [hereinafter referred as Ld. Assessing Officer('AO')] The prime issue under contention before your Honors is in relation to the non-grant of TDS and consequential interest under section 234A, 234B and 234C. In the said Order, total income of the Appellant has been assessed at INR 2,11,46,750 and credit of TDS amounting to INR 21,14,675 has not been granted. As a result, a demand of INR 27,07,820 including interest is raised for AY 2020-21. The Ld. CIT(A) has upheld the actions of the AO in not granting the credit of TDS amounting to INR 21,14,675 as claimed in the return of income by giving the following reasons: 1. The amount of royalty as mentioned in return of income of INR 2,11,46,745 and its corresponding TDS of INR 21,14,675 is reflected in Form 26AS for AY 2021-22 whereas no data is reflected in Form 26AS of subject year (AY 2020-21) i.e. neither the amount of royalty has been credited, nor corresponding TDS is reflected. Thus, basis for offering the royalty income in AY 2020-21 is not clear.

As per section 199 of the Act and Rule 37BA of the Income Tax Rules, 1962, the allowability of credit of TDS is applicable in the year in which 7 Hasbro SA, Switzerland income is received by the Appellant and in the case of the Appellant, from the Form 26AS and insight data, it is evident that the income of the Appellant is reflected in the FY 2020-21(ie. date of payment/credited is 29.01.2021). Reasons for filing additional evidence:  The Appellant was under the bona-fide belief that material already brought on record before the Ed. CIT(A) demonstrates that since royalty income is offered to hoc in A 2020-21, the corresponding TDS credit (appearing in Form 2645 of AY 2021-22) should be given for the assessment year in whicli income is amenable (Le. AY 2020-21) as per section 199 read with Rule 37BA of Income-tex Rules, 1962 (the Rules)  During the subject proceedings, neither the AO nor Ed. CTT(A) specifically asked the Appellant to produce give evidence to substantiate that royalty income pertained as A 2020-21.  Considering the objections raised by the CIT(A) that reason for offering the royalty income in AY 2020-21 is not clear, the Appellant would like to produce/rely upon the following documents as additional evidences with respect to Ground 5-f of the Grounds of Appeal:

It is thus evident from the contents of the application that the assessee- appellant could not produce these documents under the bonafide belief that the material already brought on record before the Ld. CIT(A) would demonstrate that, since the royalty income was offered to tax from A.Y. 2020-21, benefit of the corresponding TDS credit (appearing in form 26AS of A.Y. 2021-22) should be given in the assessment year in which the income is assessable i.e. A.Y. 2020-21 as per Section 199 r.w.r 37BA of Income –tax (Appellate Tribunal) Rules, 1962 (‘the Rules’). It is further stated that neither the AO nor the Ld. CIT(A) asked the Hasbro SA, Switzerland appellant to produce / give evidence to substantiate that the royalty income pertained to A.Y. 2020-21.

It is therefore, stated that due to that bonafide belief, the documents could not be produced and the end of justice requires that the assessee be permitted to file documents under Rule 29 of the ITAT Rules, 1963 and the additional evidence may accordingly be admitted.

The tax has already been deposited by the assessee. The Only question is that the relevant documents were not produced during the assessment proceedings or before the first appellate authority due to the bonafide belief/ misconception. There is nothing brought on record by the revenue which may show any Act or omission on the part of assessee or the omission was not bonafide, as nothing malafide has been alleged for brought to our notice on the part of the assessee for not producing additional evidence/ relevant evidence in support of royalty income being earned for the relevant A.Y. 2020-21.

In these facts and circumstances, we are of the considered opinion that the assessee/ appellant should not be penalized for mere technical lapse on their part by not filing the relevant document at the relevant

For the above reasons, we are of the considered opinion that the additional evidence sought to be filed, should be admitted and considered by the Revenue authorities as the lawful tax, which the assessee was liable to pay has already been paid and no prejudice is going to be caused to the revenue if the additional evidence is admitted allowed at this stage. For these reasons, the end of justice required that appellant/assessee be given an opportunity to file additional evidence in support of its claim of TDS deduction/ credit of TDS which is lawfully available to the assessee.

For the above reasons, the grounds of the appeal are allowed for statistical purposes.

The appeal is accordingly disposed off in above terms for statistical purposes.

In the result, appeal filed by the assessee is allowed with above directions for statistical purposes.