“rule 46A”
The decision most relied on for rule 46A is CIT v. Divine Leasing & Finance Ltd. (299 ITR 268), cited in 426 judgments on BharatTax.
Leading authorities on rule 46A
The Assessing Officer cannot add share capital or share premium amounts if the assessee provides the identity and creditworthiness of the subscriber and establishes the genuineness of the transaction. The court may admit additional evidence under Rule 46A, such as the PAN identity of the creditor.
The Commissioner of Income-tax (Appeals) has an independent statutory obligation to conduct proper inquiries and verify facts, especially when the Assessing Officer has failed to do so. The CIT(A) must ensure effective inquiry is carried out before deleting additions or accepting additional evidence.
The first appellate authority must admit additional evidence if it is necessary for determining the true state of affairs and preventing undue hardship or a failure of justice, even without a specific request and particularly when the case falls under Rule 46A(1)(c).
The CIT(A) must strictly comply with Rule 46A of the Income-tax Rules for admitting additional evidence, ensuring all prescribed conditions exist, reasons are recorded, and reasonable opportunity is provided to the Assessing Officer.
The Assessing Officer must consider additional evidence produced before the CIT(A) under Rule 46A and cannot reject it without proper appreciation of the facts, especially when the assessee was prevented by sufficient cause from producing it earlier.
The Commissioner of Income-tax (Appeals) must admit additional evidence if it is crucial for the proper disposal of the appeal, ensuring substantial justice to the appellant.
The production of fresh evidence at the appellate stage before the Commissioner (Appeals) is strictly governed by the conditions and procedures laid down in Rule 46A of the Income-tax Rules.
The appellate authority must follow Rule 46A of the Income Tax Rules when admitting additional evidence, which includes recording reasons for admission and providing the Assessing Officer an opportunity to verify or refute the evidence. Failure to do so violates principles of natural justice.
