TMI Blog2013 (6) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... ce for any other substantial cause under rule 27(1)(b) of Order 41 of the Code. The aforesaid case law clearly lays down a neat principle of law that discretion lies with the Tribunal to admit additional evidence in the interest of justice once the Tribunal affirms the opinion that doing so would be necessary for proper adjudication of the matter. - Once it is found that the party intending to lead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the Tribunal and the ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect. In the present case, the reason which was given by the assessee in support of its plea for admission of additional evidence was that the assessee could not produce these records before the lower authorities due to non-retrievability of e-mail on the date because of technological difficulties. This reason was specifically mentioned in the application filed. No reply to this application was filed refuting this averment, though the Departmental representative had oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal had admitted that the evidence allowing the application of the assessee under rule 29 of the Rules and remitted the case back to the Assessing Officer to decide the issue afresh after considering the said additional evidence. The Revenue-appellant feels aggrieved against this approach of the Tribunal. It is the case of the Revenue that under no circumstance, invoking the provisions of rule 29 of the Rules, such additional evidence could be permitted. It is also the grievance of the Revenue that even if rule 29 of the Rules could be invoked in a matter like this, there was hardly any justifiable reason for permitting the production of additional evidence. Keeping in view these twin contentions, the appeal was admitted on the following questions of law: (a) Whether the Income-tax Appellate Tribunal erred in law and on the merits in admitting fresh evidence under rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, and restoring the matter on allowability of management expenses on the group companies and consequential interest claimed for the first time during the year under consideration to the Assessing Officer for fresh adjudication ? (b) Whether the reason of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng additional evidence either oral or documentary before the Tribunal. However, if the Tribunal requires any document to be produced to enable it to pass orders or for any substantial cause, it may allow such document to be produced for the reasons to be recorded and allow such evidence to be adduced. The facts of the case are that the assessee claimed deduction of a substantial amount of ₹ 2.17 crores in computing the total income as expenditure incurred on availing of management services, etc., from overseas group companies. There is no doubt about the payments. The expenditure was disallowed by the lower authorities on the ground that there was no evidence regarding the rendering of the services. In order to decide this substantial issue of fact on the merits, it is necessary to take on record the evidence, which the assessee has now produced before us, failing which there will be substantial failure of justice. The reason for non-production of evidence before the lower authorities was non-retrievable of e-mail on the date due to technological difficulties. Therefore, we are of the view that it is necessary to consider the evidence to come to appropriate conclusion in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s parties and the value of the properties shown in the documents of sale was ₹ 2,58,338. The Valuation Officer of the Department estimated the market value of the properties sold at ₹ 4,17,000 and, therefore, the Income-tax Officer determined the value of the properties sold at ₹ 4,17,000 under section 52(2) of the Income-tax Act, 1961. As the cost of acquisition of the properties was ₹ 1,40,934, the difference of ₹ 2,76,066 was brought to tax as capital gains. On appeal, the Appellate Assistant Commissioner held that it had not been established that anything more than the disclosed consideration had been received by the assessee and, therefore, directed the Income-tax Officer to recompute the capital gain taking the sale consideration at ₹ 2,58,338. On appeal to the Tribunal by the Department, it was contended that the provisions of section 52(2) were applicable. The Revenue relied on certain affidavits given by five of the purchasers from the assessee to the effect that the sale of plots was effected by the assessee at ₹ 22,000 per ground though the price shown in the document was ₹ 16,500 per ground. This was objected to by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Sons v. CIT [1974] 95 ITR 109 (Mad), this court had occasion to go into the question of the powers of the Tribunal to entertain or reject evidence. While accepting that the Tribunal has got a wide discretion to admit or reject documents at the stage of appeal, it was pointed out that such a discretion cannot be exercised in an arbitrary manner and that if the Tribunal found that the documents filed are quite relevant for the purpose of deciding the issue arising before it, it would be well within its powers to admit the evidence, consider the same or remit the matter to the lower authorities for such consideration. On the facts of this case, the Tribunal felt that in the interest of justice in order to decide the question of the applicability of section 52(2) of the Act to the assessee which was agitate before it, it would be necessary to investigate and ascertain the facts in that regard, especially when certain affidavits had been relied on, which, to some extent, prima facie made out that more than the stated consideration had passed under the sale deeds. These affidavits would be relevant and necessary for deciding the question of the application of section 52(2) of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal was of the opinion that additional evidence sought to be addressed was relevant and the point in issue would be of assistance to it in deciding the appeal. It, thus, passed an order overruling the objection of the assessee and admitting the additional evidence. At the same time, the Tribunal thought it fair to given an opportunity to the assessee to explain the additional evidence and also certain other matters which it narrated in its order. Accordingly, direction was given to the Appellate Assistant Commissioner to record such further evidence as the Revenue may wish to produce and forward it to the Tribunal. After receiving the additional evidence and examining the same, the Tribunal heard the appeal of the assessee and by an elaborate order partly allowed the same. Against this order, the assessee came in appeal and also challenged the order of the Tribunal permitting the additional evidence. The court repelled this challenge holding that the Appellate Tribunal has a discretion to decide whether to admit the additional evidence or not and in the absence of any suggestion that it had acted on any wrong principle, no question of law can arise from the Tribunal's decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 41 of the Code of Civil Procedure, the appellate court has the power to allow additional evidence not only if it requires such evidence 'to enable it to pronounce judgment', but also for 'any other substantial cause'. There might well be cases where even though the court found that it was able to pronounce judgment on the state of record as it was, and so it could not strictly say that it required additional evidence to enable it to pronounce judgment, it still considered that in the interest of justice something which remained obscure should be filled up so that it could pronounce its judgment in a more satisfactory manner. Such a case would be one for allowing additional evidence for any other substantial cause under rule 27(1)(b) of Order 41 of the Code. In the instant case, in the affidavit-in-opposition filed before the learned trial judge, it had been stated that the notice had been served by affixation at 8/1, Dacres Lane, Calcutta. The aforesaid case law clearly lays down a neat principle of law that discretion lies with the Tribunal to admit additional evidence in the interest of justice once the Tribunal affirms the opinion that doing so would be ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory pronouncement of judgment on the basis of material on record is possible. In Arjan Singh v. Kartar Singh, AIR 1951 SC 193, while interpreting the provisions of Order 41, rule 27, the court remarked as follows: The legitimate occasion for the application of Order 41, rule 27 is when, on examining the evidence as it stands, some inherent lacuna or defect becomes apparent, not where a discovery is made, outside the court, of fresh evidence and the application is made to impart it. The true test, therefore, is whether the appellate court is able to pronounce judgment on the materials before it without taking into consideration the additional evidence sought to be adduced. (See also Natha Singh v. Financial Commissioner, Taxation, AIR 1976 SC 1053) In the present case, the reason which was given by the assessee in support of its plea for admission of additional evidence was that the assessee could not produce these records before the lower authorities due to non-retrievability of e-mail on the date because of technological difficulties. This reason was specifically mentioned in the application filed. No reply to this application was filed refuting this averment, though t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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