TMI Blog2008 (1) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... to dispose off all of them by a consolidated order. ITA No. 1227/Mum./2005: AY 1999-2000: Department s appeal 2. The Department is aggrieved by the order of the ld. CIT(A) deleting the disallowance of Rs. 1,31,09,951 being the interest on capital work-in-progress by holding that the addition made by the Assessing Officer was without any basis whereas the Assessing Officer, according to the Department, had given detailed reasons in the assessment order for making the said addition. 3. We have heard the parties. The assessee is engaged in the manufacture and sale of garments, apparels, home furnishing, etc., through its own retail stores and franchisee-stores. The assessee has been carrying on its business since 1987. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e retail stores. The second error committed by the Assessing Officer, according to the CIT(A), was that he did not examine the account of capital work-in-progress carefully. If the Assessing Officer had examined the capital work-in-progress account carefully, he would have noticed that the assessee had voluntarily treated Rs. 70,46,020 as pre-operative expenses out of finance charges and, in such a case, there would have been no occasion for the Assessing Officer to disallow a further sum of Rs. 1,31,09,951 as interest on capital work-in-progress. The Department has not controverted the errors, as pointed out by the CIT(A), in the assessment order. In this view of the matter, the order passed by the ld. CIT(A) in this behalf is confirmed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee had filed the documents in pursuance of the direction given by the CIT(A). He contended that there was therefore no violation of Rule 46A in that the assessee had filed additional evidence before him, i.e., the CIT(A) at his instance. He contended that Rule 46A(4) did not envisage any opportunity of hearing to be given to the Assessing Officer after the production of additional evidence at the instance of the CIT(A) and therefore the CIT(A) was right in acting upon the additional evidence produced before him. 8. We have given serious consideration to the submissions made by the ld. counsel for the assessee and by the learned Departmental Representative. Rule 46A contains the rules relating to production of additional e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The ld. counsel for the assessee is indeed right in his submission that sub-rule (4) of Rule 46A empowers the CIT(A) to direct the production of any document or the examination of any witness to enable him to dispose off the appeal. There cannot be any dispute with regard to the power given to the CIT(A) under Rule 46A(4) inasmuch as such power is quite incidental to the discharge of appellate functions assigned to him. However, the question here is whether the CIT(A) can act on the additional evidence so produced before him at his instance under sub-rule (4) without giving any opportunity of hearing to the other party. The answer to the aforesaid question, in our view, is plain NO. It is a fundamental requirement of the principles of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been reiterated in Punjab National Bank v. Kunj Behari Misra AIR 1998 SC 2713, 2721 and Collector of Central Excise v. ITC 1998 (4) JT 452, 453. 11. Turning to sub-rule (4) of Rule 46A of the IT Rules, it is seen that there is no specific exclusion of the principle of natural justice by the said rule and therefore the requirement of observing the principles of natural justice must be read into the said rule, namely, sub-rule (4) of Rule 46A. Any other view in the matter will cause irreparable prejudice to the other party on whose back the additional evidence is collected by the CIT(A) without giving any opportunity of hearing to that party. The view that we are taking in the matter ensures fairness to both the parties. Besid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve the principles of natural justice and dispose off the issue afresh in accordance with law. 12. Appeal filed by the Department is treated as allowed for statistical purposes. ITA No. 1226/Mum./2005: AY 2001-02: Assessee s appeal 13. The assessee is aggrieved by the order of the ld. CIT(A) with regard to computation of capital gain on sale of software on the ground that he has erred in enhancing the assessment and disallowing the cost of acquisition allowed by the Assessing Officer, while computing capital gains tax liability of the assessee. We have dealt with a related issue involving computation of capital gain on sale of software in the Department s appeal. Since the order of the ld. CIT(A) in this behalf has already been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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