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Facts
The assessee sought to admit additional evidence, including cash books and cash flow statements, under Rule 29 of the ITAT Rules, which the ITAT initially rejected. The Hon'ble Jurisdictional High Court subsequently set aside the ITAT's order and allowed the admission of these additional evidences, remanding the case for fresh consideration.
Held
Following the High Court's mandate, the Tribunal admitted the additional evidence and remanded the entire matter to the CIT(Appeals)/NFAC. The CIT(A) is directed to obtain a remand report from the Assessing Officer after due factual verification of the new evidences and then pass a speaking order according to law and natural justice.
Key Issues
Whether the additional evidence filed by the assessee should be admitted, and the procedure for its factual verification and examination upon remand.
Sections Cited
Income Tax (Appellate Tribunal) Rules, 1963 - Rule 29, Income Tax Act, 1961 - Section 143(2), Income Tax Act, 1961 - Section 250(4), Income Tax Act, 1961 - Section 250(6), Code of Civil Procedure - Order 41 Rule 27, ITAT Rules - Rule 46A(3)
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Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM
This is the second round of appeal before the Tribunal as the matter has been remanded back by the Hon’ble Jurisdictional High Court vide its order passed in TAXC No.230 of 2024, dated 03.03.2025.
That as apparent from the order of the Hon’ble Jurisdictional High Court facts emanating therein are that an application under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 was filed by the assessee praying for admission of additional evidences which include day to day cash book for the financial year 2015-15, copy of cash flow statement/ abstract of cash book for the financial year 2015-16 and cash book receipt side (i.e. debit entries) of financial year 2015-16.
The ITAT, Raipur had dismissed the appeal vide its order dated 05.12.2023 and also rejected the application filed under Rule 29 of the ITAT Rules finding no merit in the same. When the matter was taken on appeal before the Hon’ble Jurisdictional High Court, it was observed and held as follows: “15. The Supreme Court in the matter of Jagdish Prasad Patel (dead) Through Legal Representatives and another v. Shivnath and others4 while dealing with the provisions contained in Order 41 Rule 27 of the CPC held that the general principle is that “the appellate court should not travel outside the record of the lower court and cannot take any evidence in appeal. However, as an exception, Order 41 Rule 27 CPC enables the appellate court to take additional evidence in exceptional circumstances. The appellate court may permit additional evidence only and only if the conditions laid down in this Rule are found to exist. The parties are not entitled, as of right, to the admission of such evidence. Thus, the provision does not apply, when on the basis of the evidence on record, the appellate court can pronounce a satisfactory judgment. The matter is entirely within the discretion of the court and is to be used sparingly. Such a discretion is only a judicial discretion circumscribed by the limitation specified in the Rule itself”. Relying upon the earlier decision in the matter of the Union of India v. Ibrahim Uddin5 , their Lordships observed as under: - “30. In Union of India v. Ibrahim Uddin, (2012) 8 SCC 148 : (2012) 4 SCC (Civ) 362, this Court held as under : (SCC pp. 167-68 & 170, paras 36-37, 40 & 47) “36. The general principle is that the appellate court should not travel outside the record of the lower court and cannot take any evidence in appeal. However, as an exception, Order 41 Rule 27 CPC enables the appellate court to take additional evidence in exceptional circumstances. The appellate court may permit additional evidence only and only if the conditions laid down in this Rule are found to exist. The parties are not entitled, as of right, to the admission of such evidence. Thus, the provision does not apply, when on the basis of the evidence on record, the appellate court can pronounce a satisfactory judgment. The matter is entirely within the discretion of the court and is to be used sparingly. Such a discretion is only a judicial discretion circumscribed by the limitation specified in the Rule itself. (Vide K. Venkataramiah v. A. Seetharama Reddy , Municipal Corpn., Greater Bombay v. Lala Pancham , Soonda Ram v. Rameshwarlal [Soonda Ram v. Rameshwarlal and Syed Abdul Khader v. Rami Reddy [Syed Abdul Khader v. Rami Reddy .) 37. The appellate court should not ordinarily allow new evidence to be adduced in order to enable a party to raise a new point in appeal. Similarly, where a party on whom the onus of proving a certain point lies fails to discharge the onus, he is not entitled to a fresh opportunity to produce evidence, as the court can, in such a case, pronounce judgment against him and does not require any additional evidence to enable it to pronounce judgment. (Vide Haji Mohammed Ishaq v. Mohd. Iqbal and Mohd. Ali & Co.) * * *
The inadvertence of the party or his inability to understand the legal issues involved or the wrong advice of a pleader or the negligence of a pleader or that the party did not realise the importance of a document does not constitute a “substantial cause” within the meaning of this Rule. The mere fact that certain evidence is important, is not in itself a sufficient ground for admitting that evidence in appeal. * * * 47. Where the additional evidence sought to be adduced removes the cloud of doubt over the case and the evidence has a direct and important bearing on the main issue in the suit and interest of justice clearly renders it imperative that it may be allowed to be permitted on record, such application may be allowed.” 16. Reverting to the facts of the case in light of the parameters laid down by their Lordships of the Supreme Court, it is quite vivid that the application filed under Rule 29 of the ITAT Rules came to be rejected by the ITAT on the ground that both the cash book and cash flow statement which the assessee filed before the CIT (Appeals) were in the nature of additional evidence and the assessee firm had adopted an evasive approach in assessment proceedings and not filed either of the aforesaid documents, which formed the very basis for selecting its case for limited scrutiny assessment under Section 143(2) of the IT Act. The ITAT did not record a finding that the documents mentioned in paragraph 6 of the order as “additional evidence” are not necessary for deciding the case and pronouncing judgment or order for any substantial cause even after having recorded finding that those documents are vital and important as they form basis for limited scrutiny assessment under Section 143(2) of the Act. However, it is pertinent to note that so far as cash book is concerned, only one page had already been filed before the Assessing Officer and it is not the finding of the ITAT that these documents are not necessary for just and proper disposal of appeal preferred by the appellant and for pronouncing the judgment. The ITAT has erred in law without recording a specific finding which is sine qua non for considering the admission of documents and proceeded to reject the application. The learned ITAT has legally erred in law in rejecting the application which runs contrary to the well settled decision in this behalf and consequently, the impugned order rejecting the application filed under Rule 29 of the ITAT Rules is set aside and subsequently, the appellate order dated 5-12-2023 is also set aside. The application under Rule 29 of the ITAT Rules for admission of additional evidence is allowed, as it is necessary for just and proper disposal of appeal. Documents are taken on record. In view of our answer to substantial question of law No.B, we deem it inexpedient to answer substantial question of law No.A, as it would be open for the ITAT to take fresh view in the matter since the application under Rule 29 of the ITAT Rules has been allowed. The matter is restored to the file of the ITAT for hearing and disposal afresh in accordance with law.
The appeal is allowed to the extent indicated herein-above leaving the parties to bear their own cost(s).”
That as evident from Para 16 of the order of the Hon’ble Jurisdictional High Court (supra), the application of the assessee under Rule 29 of the ITAT Rules for admission of additional evidences has been allowed and the said documents are taken on record. Therefore, these additional evidences namely, cash book and cash flow statement as well as documents mentioned as per application under Rule 29 of the ITAT Rules, needs to be factually verified and examined on record by the revenue authorities before arriving at any conclusion. In accordance thereof following the mandate of Rule 46A(3) of the ITAT Rules since additional evidences has already been accepted by the Hon’ble Jurisdictional High Court, therefore, all these documents/evidences are remanded back to the file of the Ld. CIT(Appeals)/NFAC to call for a remand report from the A.O regarding all these additional evidences after making due factual verification and examination on record. The Ld. CIT(Appeals)/NFAC thereafter, shall pass a speaking order in terms with Section 250(4) & (6) of the Act complying with the principles of natural justice and as per law. The assessee shall also comply with all the hearing notices and represent its case on merits before the Ld. CIT(Appeals)/NFAC.
As per the above terms the said appeal of the assessee is allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in open court on 2nd day of June, 2025.