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2016 (1) TMI 943 - ANDHRA PRADESH HIGH COURT

2016 (1) TMI 943 - ANDHRA PRADESH HIGH COURT - TMI - Deduction u/s 10A - CIT(A) allowed the claim confirmed by ITAT - mandate of Rule 46-A (3) ignored - Held that:- The statutory obligation which the CIT (A) was required to discharge, under Rule 46-A(3) of the Rules, cannot be whittled down, or brushed aside as performing a ritual. While sub-rule (4) of Rule 46-A of the Rules, no doubt, confers power on the first appellate authority to cause production of documents, justice and fair play would r .....

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ingly, set aside. As the CIT (A) has examined the documents, without giving the assessing officer an opportunity of being heard, his order must also be set aside. The CIT (A) shall make available copies of the documents, placed before him by the assessee, to the assessing officer and, after giving him an opportunity of being heard in this regard, pass orders afresh and in accordance with law. - Decided in favour of revenue - ITTA 119 / 2015 - Dated:- 14-12-2015 - RAMESH RANGANATHAN AND M.SATYANA .....

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n I.T.A.No.1081 of 2013 dated 21.03.2014. A best judgment assessment was passed under Section 144 of the Act by the assessing authority on 21.01.2013 disallowing deductions under Section 10-A of the Act. Aggrieved thereby, the assessee carried the matter in appeal to the CIT (A) who, in his order dated 29.04.2013, observed that the appellant had explained the reasons for non-appearance on some dates, on the ground that the company was in dire straits; they had also stated that the information, s .....

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ellant s claim for deduction, under Section 10-A of the Act, had been disallowed. Aggrieved by the order passed by the CIT (A), the Revenue carried the matter in appeal to the ITAT which, in the order impugned in the appeal before us, referred to the judgments of the Allahabad High Court in Smt.Mohinder Kaur v. Central Government 104 ITR 120 (All) ; CIT v. K.Ravindranathan Nair 265 ITR 217 (Ker); the Calcutta High Court in Rajkumar Srimal v. CIT 102 ITR 525; the Gujarat High Court in CIT v. Vali .....

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uce any evidence, information or material that was not produced before or considered by the assessing officer; the purpose of Rule 46-A of the Income Tax Rules (for brevity, the Rules ) is to place fetters on the rights of an appellant to produce additional evidence before the first appellate authority, and not on the right of the first appellate authority to call for production of any fresh evidence or information; this aspect is clear from sub-rule (4) of Rule 46-A itself; the entire additiona .....

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s conducted, supported the case of the assessee had no bearing on the jurisdiction and powers of the CIT (A); the CIT(A) could have confronted the assessing officer with the evidence received and the material gathered; he could have allowed the assessing officer to have his say in the matter; if he had done so, no dispute would have arisen; there was, however, no requirement in law that the first appellate authority should invariably consult or confront the assessing officer every time additiona .....

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y to rebut the fresh evidence; even that requirement cannot be said to be a rule of universal application; if the additional evidence, furnished by the assessee before the first appellate authority, is in the nature of clinching evidence, leaving no further room for any doubt or controversy, in such a case no useful purpose would be served in performing the ritual or forwarding the evidence/material to the assessing officer and in obtaining his report; and, in such exceptional circumstances, the .....

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the assessing authority is not in dispute. Section 250 of the Act prescribes the procedure in appeal. Section 250 (1) of the Act enables the CIT (A) to fix a day and place for the hearing of the appeal, and to give notice of the same to the appellant, and to the assessing officer against whose order the appeal is preferred. Section 250 (2) of the Act stipulates that the appellant, and the assessing officer, shall have a right to be heard at the hearing of the appeal. Section 250 (4) of the Act s .....

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proceedings before the [Assessing Officer], except in the following circumstances, namely :- (a) where the [Assessing Officer] has refused to admit evidence which ought to have been admitted ; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer]; or (c) where the appellant was prevented by sufficient cause from producing before the [Assessing Officer] any evidence which is relevant to any ground of .....

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ccount any evidence produced under sub-rule (1) unless the [Assessing Officer] has been allowed a reasonable opportunity- (a) to examine the evidence or document or to crossexamine the witness produced by the appellant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. (4) Nothing contained in this rule shall affect the power of the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] to dir .....

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e, other than the evidence produced by him before the course of proceedings before the assessing authority, sub-rule (2) stipulates that no evidence shall be admitted, under sub-rule (1), unless the appellate authority records, in writing, reasons for its admission. Under sub-rule (3) the first appellate authority shall not take into account any evidence, produced under subrule (1), unless the assessing officer has been allowed a reasonable opportunity to examine the evidence or documents, or to .....

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ny evidence produced before him unless the assessing officer has been allowed a reasonable opportunity to examine the evidence or documents. In the present case, admittedly, no such opportunity has been afforded to the assessing officer. The Tribunal has held that, if the evidence is clinching in nature and does not leave any further room for doubt, no useful purpose would be served in performing the ritual. What the Tribunal failed to note is that Rule 46-A (3) requires the assessing officer to .....

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hamed Ahmedbhai4 rejected the view, similar to the one taken by the Tribunal, and held that the CIT (A) should not have taken into account any evidence produced under Rule 46- A(1) unless the Income-tax officer has been allowed a reasonable opportunity to examine the evidence or to cross-examine the witness whose evidence was taken on record or to produce any evidence in rebuttal of the additional evidence produced by the assessee; the CIT (A) could not have relied on the additional evidence wit .....

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eal, by way of augmenting the record, the ITO ought to have been heard, and given an opportunity to meet the additional material, by way of cross-examination, counterevidence and urging submissions in the context of the augmented record; when a prayer for additional evidence is made, it is an independent and substantive application seeking a new right; notice of such application was necessary to the ITO; he should have been afforded the opportunity to oppose it; no order granting the request for .....

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