TMI Blog2006 (7) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 15(4) of the Interest-tax Act. 2. In the computation of taxable interest, as per the revised return filed by the assessee, the assessee claimed deduction on account of interest on Commercial Paper, to the tune of Rs. 24,65,095 Before the Assessing Officer, the assessee submitted that an investment of Rs. 9,50,25,039 had been made by it with M/s. Kotak Mahindra Finance Ltd., on which, interest at the rate of 10.25 per cent was earned, for 90 days, amounting to Rs. 24,65,095. The Assessing Officer, however, observed that the assessee had not filed any evidence or proof that this interest was exempt, as per the Interest-tax Act. As such, the Assessing Officer added this amount to the taxable interest shown by the assessee. 3. On app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s down the sections of the Income-tax Act which are applicable to the Interest-tax Act, does not mention section 295 of the Income-tax Act. It is only under section 295 of the Income-tax Act that rule-making power has been exercised and the Income-tax Rules, 1962 have been framed. Rule 46A(3) is a rule under the Income-tax Rules, 1962. That being so, the grievance of the department that additional evidence was entertained by the CIT(A) in this case at the back of the Assessing Officer, is not maintainable. 5.1 Further, the learned counsel for the assessee has submitted that even section 15(4) of the Interest-tax Act, which has been sought to be invoked by the department by way of the present ground of appeal No. 1, is different. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the Gazette of India, make rules for the whole or any part of India for carrying out this Act." 8. The learned counsel for the assessee has pleaded that applicability of the provisions of the Income-tax Act, to the Interest-tax Act, is governed by section 21 of the Interest-tax Act. For facility, section 21 of the Interest-tax Act is being reproduced hereunder:- "21- Application of provisions of Interest-tax Act.- The provisions of sections and Schedules of the Income-tax Act and the Income-tax (Survey Proceeds) Rules, 1962 as enforced from time to time shall apply that necessary modification as if the said provisions and the rule referred to Interest-tax instead of Income-tax Act; and 2(44), 119, 129, 131, 132, 132A, 132B, 133 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act has not been made applicable to the Interest-tax Act. This is so, because the Interest-tax Act contains section 27, which carries the power to make rules for carrying out the purposes of the Interest-tax Act. 8.3 Obviously, the Rule-Making Power for making rules to carry out the purposes of one specific enactment cannot, unless so specified by the Legislature, be imported for another separate Act. That is the reason why section 295 of the Income-tax Act does not find mention in the sections enumerated in section 21 of the Interest-tax Act. However, this contention of the learned counsel for the assessee does not carry the case of the assessee any further. Firstly, at worst, as is evident from the above discussion, it is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll, with any necessary modification, be in accordance with the procedure applicable in relation to the Income-tax Act." Section 15(5) of the Interest-tax Act, therefore, makes the position crystal clear. It specifically lays down that the hearing and the determination of the appeals before the learned Commissioner of Interest-tax (Appeals), which includes entertaining of additional evidence, is to be in accordance with the procedure applicable in relation to the Income-tax Act. In other words, the procedure to be adopted by the Commissioner of Interest-tax (Appeals), while entertaining additional evidence, is that laid down in rule 46A(3) of the Income-tax Rules, 1962, the said rule unequivocally being a rule applicable 'in relation to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asts a statutory obligation on the Commissioner (Appeals) not to take into account any additional evidence unless the Assessing Officer has been allowed a reasonable opportunity to rebut the same. In the present case, as the impugned order itself shows, no opportunity has been afforded to the Assessing Officer by the learned CIT(A) before entertaining the additional evidence. This action is clearly violative of rule 46A(3) of the Income-tax Rules,1962, which, as discussed hereinabove, is squarely applicable to proceedings under the Interest-tax Act. 12. An argument could be raised that whereas in the Income-tax Act, a specific power has been given by section 295 to the CBDT to frame rules and rule 46A of the Income-tax Rules has been fram ..... X X X X Extracts X X X X X X X X Extracts X X X X
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