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Income Tax Appellate Tribunal, DELHI BENCH “B” DELHI
Before: SHRI CHANDRA MOHAN GARG & SHRI PRADIP KUMAR KEDIA
The captioned appeal has been filed by the Assessee against the order of the Commissioner of Income Tax (Appeals)- XXXIII, New Delhi (‘CIT(A)’ in short) dated 12.09.2018 arising from the assessment order dated 21.12.2016 passed by the Assessing Officer (AO) under Section 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2014-15.
The grounds of appeal raised by the assessee read as under:
“1. That on the facts of the case and under the law, the documentary evidences, which were in public domain and which were furnished by the assessee before the Ld. CIT(A) simply to support its contention (which was made by the assessee before the Ld Assessing Officer) that the tax was not required to be deducted at source out of interest paid/ payable to RIICO - a State Government Company, ought to had been admitted .
2. That on the facts of the case and under the law, Id. CIT(A) has erred in not considering the documentary evidences, which were made available to him by the assessee during the course of appellate proceedings to decide the issue relating to addition/disallowance of Rs.11,90,688/- made u/s.40(a)(ia).
That on the facts of the case and under the law, addition/disallowance of Rs.11,90,688/- made u/s. 40(a)(ia) deserves to be deleted.”
3. Briefly stated, the assessee filed return of income declaring loss of Rs.4,65,60,448/-. The case was selected for scrutiny assessment under Section 143(3) of the Act. In the course of the assessment proceedings, the Assessing Officer inquired on the applicability of TDS on interest payment to Rs.11,90,688/- made to Rajasthan Estate Industrial Development and Investment Corporation (RIICO). The Assessing Officer eventually disallowed the interest invoking Section 40(a)(ia) of the Act on the ground that TDS on interest has not been deducted as applicable under Section 194A of the Act.
Aggrieved, the assessee preferred appeal before the CIT(A). Before the CIT(A), the assessee filed certain government notifications to establish that the recipient company, i.e., RIICO is exempted from the applicability of Section 194A and therefore, the assessee cannot be treated in default under Section 40(a)(ia) of the Act. The CIT(A) treated such document as additional evidences and refused to admit such additional evidences. Having done so, the CIT(A) confirmed the action of the Assessing Officer.
Further aggrieved, the assessee preferred appeal before the Tribunal.
We have heard the rival submissions. The assessee contends that the additional evidences placed before the CIT(A) are in the nature of government notification and are in public domain and therefore strictly speaking there is no additional evidence in it. The notification goes to the root of the matter and are extremely relevant for the purpose of detemiantion of tax liability of the assessee and therefore, should not have been discarded by the assessee on technical grounds.
The ld. counsel submitted that on the basis of notification, the recipient company RIICO does not fall within the purview of Section 194A of the Act and therefore, Section 40(a)(ia) is not attracted in the instant case on merits. We find merit in the plea of the assessee company for admission of the evidence sought to be relied upon for determination of correct taxable income. Rule 46A of the Income Tax Rules is founded upon principles of natural justice. In the process of discharging the appellate function, it is incumbent upon the CIT(A) not to arbitrarily refuse to make an enquiry where circumstances so demand and to therefore either admit or call for additional evidence if so needed in terms of Section 250(4) of the Act. Thus, Section 250(4) r.w. Rule 46A gives ample power to the CIT(A) to admit the additional evidence in the circumstances which are available in the present case. It is the case of the assessee that non consideration of government notification will cause serious prejudice to the assessee and such additional evidence is in the nature of government notification which in any case is available in the public domain.
Having regard to the facts and circumstances of the case, we are of the view that the CIT(A) should have exercise its statutory power to admit the additional evidence in favour of the assessee befitting with the fact situation in order to advance the cause of substantial justice. In the present case, there does not appear to be any impediment even under Rule 46A for admission of such additional evidence. Therefore, the action of the CIT(A) is set aside and the issue is restored back to the file of the CIT(A) for fresh adjudication after taking into account such additional evidences as may be placed by the assessee to support its contention on the issue towards non deductibility of TDS on interest payment to RIICO. We however do not express any opinion on merits of the issue at this juncture. It shall be open to the CIT(A) to examine the documents and explanations offered concerning the issue and decide the issue afresh in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 21/04/2023.