TMI Blog2006 (11) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt only before the CIT when no such document was placed before the assessing authority as reflected from the order. It was categorically held by the assessing authority therein that the sale transactions of the utensils were not proved in spite of opportunities afforded. That being the position, we are constrained to hold that the appellate authority acted in violation of rule 46A and the acceptance of the xerox copy of the sale proceeds as additional evidence de hors rule 46A of the Rules, because the appellant is not entitled to produce oral or documentary evidence afresh before the appellate authority, as a matter of right. Under special and/or certain circumstances only/as mentioned, in clauses (a), (b), (c) and (d) of rule 46A(1) additional evidence can be adduced. Rule 46A itself contains the principles of natural justice. That being so, sub-rule (4) of rule 46A does not permit to accept any additional evidence in contravention of the provisions of sub-rules (2) and (3) of rule 46A. The appellate authority is not permitted to act whimsically while exercising the jurisdiction under rule 46A of the Rules. Accordingly, it is a fit case for remand for proper adjudication o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n additional evidence by the appellate authority, i.e., Commissioner of Income-tax without following the procedural law prescribed under sub-rules (1), (2) and (3) of rules 46A. 5. For ready reference and also for the sake of convenience, it would be proper and relevant to refer to those provisions of law under the Income- tax Act, 1961 (for short, the Act ), and the rules that would be necessary for proper adjudication of the appeal at hand. 6. Section 250 of the Act reads as under : 250.(1) The Commissioner (Appeals) shall fix a day and place for the hearing of the appeal, and shall give notice of the same to the appellant and to the Assessing Officer against whose order the appeal is preferred. (2) The following shall have the right to be heard at the hearing of the appeal (a) the appellant either in person or by an authorised representative ; (b) the Assessing Officer, either in person or by a representative. (3) The Commissioner (Appeals) shall have the power to adjourn the hearing of the appeal from time to time. (4) The Commissioner (Appeals) may, before disposing of any appeal, make such further enquiry as he thinks fit, or may direct the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xercise two options in disposing of the appeal under section 250 of the Act ; firstly, he may himself dispose of the appeal so preferred before him under the aforesaid provisions by making such inquiry as he thinks fit, when by the second option he may direct the Assessing Officer to make further inquiry and report the result of such inquiry to him. 9. On the other hand, the provision of rule 46A(1) above noted clearly bars the production of any additional evidence. It would go to show that the production of additional evidence is not a matter of right. However, in exceptional cases, on the basis of any one of the grounds which have been manifestly and apparently set out in rule 46A(1) itself, the appellant is permitted to produce additional evidence subject to approval/admission of the same by the appellate authority. This provision enumerates four circumstances allowing the appellant/assessee to produce additional evidence, namely, (i) if the Assessing Officer refuses to admit the evidence which ought to have been admitted ; (ii) when the appellant was prevented by sufficient cause from producing such evidence which he was called upon to produce by the Assessing Officer ; (iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the enhancement of the assessment or penalty. 13. None the less, relying heavily upon the provision so laid down under sub-rule (4) of rule 46A, Mr. Joshi, learned senior counsel has tried to impress upon this court that the provision so laid down in rule 46A(4) is to be read harmoniously with sub-rules (1), (2) and (3) of rule 46A and such reading would clearly reveal that the provision of rule 46A(4) can be exercised by the Commissioner (Appeals) independently without going through sub-rules (1), (2) and (3) of rule 46A, if he is satisfied that such provision of additional evidence is necessary. It is contended that those provisions of rule 46A(1), (2) and (3) are co-terminous with the provision laid down under sub-rule (4) of rule 46A. According to him, nothing has been laid down in sub-rules (1), (2) and (3) to preclude the Commissioner (Appeals) from exercising his power under sub-rule (4) to allow the assessee for production of additional evidence for the purpose of proper adjudication and disposal of the appeal and that is exactly what happened in the instant case. 14. At this stage a brief narration of the factual matrix projected herein may be necessary to be refle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunities offered. The amount claimed as sale proceeds of the utensils is a big sum of money and the assessee should have proved the genuineness of sale receipts with material evidence. But he failed to do so. In the circumstances, I could not accept the alleged sale transactions of the utensils as genuine. The cash brought in and added to the capital account under the cover of sale proceeds of the utensils therefore, remains unexplained and as such, treated as that assessee' s income from other source. 16. From the perusal of the above findings, it transpires that the amount mentioned in the order itself according to the Assessing Officer, was found to be unacceptable and accordingly, the same was added to the capital account for alleged sale of utensils. The assessee/respondent failed to prove such sale transaction by adducing any evidence. Even the sale transactions to the extent of Rs. 6,38,000 remained unproved. It is seen that before the assessing authority, no evidence oral or documentary whatsoever was ever placed explaining the receipt of the sale proceeds of the disputed amount. 17. Being aggrieved, the assessee/respondent moved the appellate authority, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords, it would go to show that the said document was produced by the assessee in order to prove the sale proceeds of the amount of Rs. 6,38,000 before the Commissioner of Income- tax. It also appears from the above finding that the assessee/respondent informed the appellate authority for the first time that those utensils were sold to one M/s. Rara Brothers and that too all the transactions were done through bank accounts. In such circumstances, admittedly, the xerox copy was filed as additional evidence. None the less, the Commissioner of Income-tax did not record in writing any such reasons that prompted him to allow such additional evidence. It is manifest and apparent from the order of the assessing authority itself, as already noted above, that before the assessing authority, the assessee failed to adduce any sort of evidence to accept the sale proceeds. That being the position, at the appellate stage, the appellant was allowed to permit to produce the xerox copy of the sale proceeds. The record does not reveal that there was any such compliance with sub-rules (1), (2) and (3) of rule 46A. It is not a case of the respondent that no additional evidence was produced. It also doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed under sub-rules (1), (2) and (3) of rule 46A, once additional evidence is produced. It is pertinent to refer herein to Order 41, rule 27, Civil Procedure Code, which is almost in pari materia with rule 46A(1). It also does not allow the appellant to adduce any additional evidence until and unless such exceptional circumstances, as provided therein, are set out before the appellate authority. The language of rule 46A is clear and loud to the effect that no additional evidence is permitted save and except in exceptional cases in terms of rule 46A(1) and that too only after compliance of sub-rules (2) and (3) thereto. 22. Mr. Joshi has placed reliance upon a decision in a case of Smt. Prabhavati S. Shah v. CIT reported in [1998] 231 ITR 1, wherein the Bombay High Court, in dealing with sub-rule (4) of rule 46A, at page 7, held that the restrictions placed on the production of additional evidence by the appellant under rule 46A shall not affect the powers of the appellate authority to call for the production of any document or the examination of any witness to enable him to dispose of the appeal. It was also categorically held that the powers conferred upon the appellate auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was categorically held by the assessing authority therein that the sale transactions of the utensils were not proved in spite of opportunities afforded. 28. That being the position, we are constrained to hold that the appellate authority acted in violation of rule 46A and the acceptance of the xerox copy of the sale proceeds as additional evidence de hors rule 46A of the Rules, because the appellant is not entitled to produce oral or documentary evidence afresh before the appellate authority, as a matter of right. Under special and/or certain circumstances only, as mentioned, in clauses (a), (b), (c) and (d) of rule 46A(1) additional evidence can be adduced. Rule 46A itself contains the principles of natural justice. That being so, sub-rule (4) of rule 46A does not permit to accept any additional evidence in contravention of the provisions of sub-rules (2) and (3) of rule 46A. The appellate authority is not permitted to act whimsically while exercising the jurisdiction under rule 46A of the Rules. 29. Accordingly, it is a fit case for remand for proper adjudication of the case by following the established procedure laid down under rules 46A(1), (2) and (3) of the Rules which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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