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Income Tax Appellate Tribunal, AHMEDABAD ‘D’ BENCH, AHMEDABAD
Per Pramod Kumar, AM: 1. By way of this appeal, the assessee appellant has challenged correctness of the order dated 30th December 2013, passed by the learned CIT(A)-IV, Baroda, in the matter of assessment under section 143(3) of the Income Tax Act, 1961 for the assessment year 2010-11, on the following grounds :-
The learned CIT (A) has erred in law on facts in confirming the addition of Rs.14,01,070/- u/s 69A of the Income-tax Act, 1961. The same being bad in law and deleted now. 2. The learned CIT(A) has erred in law on facts in confirming the addition of Rs.12,84,088/- u/s 69 of the Income-tax Act, 1961. The same being bad in law and deleted now.
When the matter came up for hearing, it was noticed that the learned CIT(A) has, relying upon Hon’ble jurisdictional High Court’s judgement in the case of Fairdeal
ITA No. 661/Ahd/2014 Assessment/Year : 2010-2011 Page 2 of 5 Filaments Limited vs. CIT [(2008) 302 ITR 173 (Guj.), declined to admit the additional evidence in the matter.
Learned counsel for the assessee submits that it was a fit case in which learned CIT(A) ought to have admitted additional evidence and decided the matter, in the light of the additional evidences, on merits. He relies upon the judgement of Hon’ble jurisdictional High Court in the case of CIT vs. Kamlaben Sureshchandra Bhatti [(2014) 367 ITR 692 (Guj.). 4. Learned Departmental Representative, on the other hand, relies upon the stand of the learned CIT(A) and submits that the learned CIT(A) rightly declined admission of the additional evidence. 5. We have heard the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.
We find that so far as facts of the case in the judgement of jurisdictional High Court in the case of Fairdeal Filaments Limited (supra) is concerned, it is important to note it was in the context of a situation in which the CIT(A) as also this Tribunal was of the view that sufficient opportunities were given to the assessee for production of additional evidence but the assessee did not avail the same. It was in this context and dealing with the powers of this Tribunal under Rule 29 that the Hon’ble High Court held that the benefit of Rule 29 was not available to a person who was negligent, non- cooperative and recalcitrant. In the present case, however, the facts are materially different. The assessee was asked to furnish evidence during the assessment proceedings on hearing fixed on 14.12.2012 and when assessee sought for adjournment, the hearing was adjourned to 20.12.2012 and it was further clarified that no further adjournment will be given. The effective time for this compliance was thus just six days against the request for adjournment. This can hardly be a reasonable opportunity of hearing. Particularly with respect to the evidences which were sought to be submitted and have not been submitted. While on this aspect of the matter we may usefully note the following observation made by co-ordinate bench of this Tribunal in the case of ITO vs. Bajoria Foundation, 71 TTJ 343 :- “In this regard, we may however refer to observations of Shri G. Krishnamurty, the then Hon’ble President and while articulating views on behalf of Jaipur Bench of this Tribunal in the case of Electra (Jaipur) (P.) Ltd. v. IAC [1988] 26 ITD 236(Del.), which are reproduced below :
ITA No. 661/Ahd/2014 Assessment/Year : 2010-2011 Page 3 of 5 "After going through the evidence placed before us, considering the facts of this and going through the orders of the authorities below, we are of the view that the assessee should not be disqualified from producing this evidence merely on the ground that the evidence was not placed before authorities below. The sole purpose of judiciary as of the Revenue is to get at the truth. If the truth is that payment of commission was genuine and was dictated by the business needs, such a payment should not be disallowed merely on the ground that assessee was unable to lead proper evidence or on the ground that evidence lead was of such a nature as to create a very high degree of suspicion. There should be no objection to consider any evidence produced, to test its authenticity and relevance and then act on it. If the evidence is genuine, reliable, proves assessee’s case, then assessee should not be denied the opportunity. But on the other hand, if the evidence led turns out to be spurious, fabricated or of irrelevant nature, such consequence, as provided under the law, will ensure. It is, therefore, incorrect to shut out the assessee in the process of administration of justice from leading evidence to prove its case. The earlier inability to lead the evidence should not be held against the assessee unless it is known to the Court or suggested to the Court or there was evidence to the suspect that evidence was fabricated. There is no such suggestion in this case. We are therefore, of the opinion that request of the learned counsel is reasonable and request made by the Department for the refusal of its admission is not proper....." 5. We also find that Hon’ble Orissa Court in the case of B.L. Chowdhury v. CIT [1976] 105 ITR 371 (Ori.) have observed that by the virtue of section 250 wide provision has been made conferring jurisdiction on the first appellant authority to make such inquiry as he deem fit and that CIT(A) does not exceed his jurisdiction if he asks or allowed the appellant to file additional evidence in the matter he thinks fit. Hon’ble Bombay High Court, in the case of Smt. Prabhavati S. Shah v. CIT [1998] 148 CTR (Bom.) 192 : [1998] 231 ITR 1 (Bom.), have observed that rule 46A does fetter the right of the assessee to produce evidence but it does not restrain CIT(A)’s powers under section 250(4) or 250(5) of the IT Act and that this rule appears to ensure tht evidence is primarily led before the Assessing Officer. In view of this judgment of the Hon’ble a Bombay High Court, if prima facie an information is necessary to examine the claim of the assessee, the CIT(A) should consider the necessary evidence in exercise of his powers under sub-sections (4) and (5) of section 250. It is trite that Rule have to be framed within the scope of main, provision and that a rule, which travels beyond or is inconsistent with or is repugnant to the provisions in the stature will be ultra vires and void. Rule 46A was introduced w.e.f. 1-4-1973 and as a result of insertion of section 295(2)(mm) in the IT Act which empowered Board to provide for the circumstances in which, the condition subject to which and the manner in which CIT(A) may permit an appellant to produce an evidence which the appellant did not produce or was not allowed to produce before the Assessing Officer. However, these powers of the Board, which have been vested in them for carrying out for the purposes of the Act, have to be exercised in such a judicious manner so as not to make any statutory provision redundant and nugatory. The rules made in exercise of these powers should also not be interpreted in such manner as to narrow
ITA No. 661/Ahd/2014 Assessment/Year : 2010-2011 Page 4 of 5 down, dilute or curtail the statutory powers, conferred on the CIT(A), by the provisions of section 250(4) or (5) of the IT Act, 1961. Therefore, a harmonious interpretation of section 250, even read with rule 46A, cannot but mean that if facts of a case warrant that, before disposal of any appeal, CIT(A) is required to make further inquiries, either on his own or through the Assessing Officer he is not denuded of the powers to do so because of the provisions of rule 46A. 6. We are conscious to the esteemed views of Hon’ble jurisdictional High Court that there has to be a reasonable explanation for non filing of such additional evidence before the Assessing Officer. Hon’ble Calcutta High Court, in the case of Raj Kumar Srimal v. CIT [1976] 102 ITR 525 (Cal.), had no occasion to examine this aspect of the matter wherein Justice Sabyasachi Mukerjee (as he then was) observed : "It is true, as contended by the counsel of the assessee, that AAC has very vide powers and the interest of the substantial justice he can make further enquiry and he can admit a new ground of appeal. He can also give deductions not claimed by the assessee, as was held by this Court in the case of Union Coal Co. Ltd. v. CIT [1968] 70 ITR 45 (Cal.). In this case, counsel for the Revenue also did not dispute that in certain circumstances the AAC had jurisdiction to admit new grounds if it was necessary to admit new evidence. The point in this case is not whether the AAC is entitled to admit the new ground or evidence either suo motu or at the invitation of parties. In this, case, this is apparent that the AAc was not acting suo motu in additional evidence. If AAC was acting on being invited by the assessee, there must be some ground for admitting new evidence in the sense that there must be some explanation of show that the failure to adduce evidence earlier sought to be adduced before AAC was not wilful and not unreasonable..... If without any explanation at all, the AAC admits additional evidence at the invitation of the parties, he would be exercising, in our opinion, a discretion not properly. He has undoubtedly a discretion vested in him to admit additional evidence in appropriate 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 cases the appellate authority is competent, in our opinion, to interfere in the discretion by the AAC." It is, therefore necessary that appellate authority has to be satisfied on bona fides of the reasons of filing evidence-an aspect which has also been referred to in Electra’s case, supra. In the case before us, the assessee’s claim before the CIT(A) has been that "adequate opportunity has not been given for hearing" and that "order under section 144 is not justified". It was in the background of these facts that the assessee submitted some fresh evidence in the shape of section 80G exemption certificate of Anandlok Hospital and papers supporting the corpus donations. All other papers like audit report, list of charities and donations and financial statements were already filed before the Assessing Officer, along with the income-tax return. It is also not Revenue’s case that filing of additional evidence before the CIT(A) smacks of any mala fides or deliberate intent to act contrary to the scheme of the IT Act. We therefore, admittance of additional evidence by the CIT(A).”
ITA No. 661/Ahd/2014 Assessment/Year : 2010-2011 Page 5 of 5 7. In the present case also, in our considered view, additional evidence referred to by the assessee are necessary for the purpose of adjudication of the appeal by learned CIT(A). Rule 46A cannot be construed in such a matter so as to dilute or curtail statutory powers under section 250(4) of the Act to make further inquiries, either on his own or through Assessing Officer, when the facts and circumstances of the case so justify or warrant. In view of these discussions, in our considered view, the learned CIT(A) has taken too narrow a view of his powers regarding additional evidence. In our considered view, on the facts of the present case, the additional evidence filed by the assessee was necessary and relevant for adjudication of appeal before the learned CIT(A). Learned CIT(A) ought to have admitted the additional evidence in exercise of his powers under section 250(4). We, therefore, direct the learned CIT(A) to admit the additional evidence and decide the matter afresh in the light of the same. With these directions, the matter is being remitted to the file of learned CIT(A) for adjudication denovo. We may further clarify that the assessee shall be at liberty to raise any such legal or factual issue as deemed appropriate and the learned CIT(A) will decide the same byway of a speaking order in accordance with law after affording a reasonable opportunity of hearing to the assessee.
In the result, appeal is allowed for statistical purposes. Pronounced in the open court today on the 22nd day of September, 2017.
Sd/- Sd/- Mahavir Prasad Pramod Kumar (Judicial Member) (Accountant Member) Ahmedabad, the 22nd day of September, 2017 Copies to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad