ITO, New Delhi V. M/s Kalra Papers Pvt. Ltd., New Delhi

ITA 4451/DEL/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5880 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 07-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment; Recovery proceedings; Principle of natural justice; Period of limitation; Source of fund; Additional evidence; Speculation loss; Onus to prove; Time period of passing order; Set aside
• Section: 143(3); 250; 251; 68

Judgement Text

FIT FOR PUBLICATION SD/- SD/- (JM) ( AM) IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: A: NEW DELHI) BEFORE SHRI H.S. SIDHU JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO:- 4451/DEL/2015 ( ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER, WARD 14(1), NEW DELHI. VS. M/S KALRA PAPERS PVT. LTD., 20 AND 34, RAJA GARDEN, NEW DELHI-110015. PAN NO: AAACK0705B APPELLANT RESPONDENT REVENUE BY : SHRI SANJOG KAPOOR, SR. DR ASSESSEE BY : SHRI ANIL JAIN, CA PER ANADEE NATH MISSHRA, AM (A) THIS APPEAL BY REVENUE IS FILED AGAINST THE IMPUGN ED APPELLATE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-V, NEW DELHI, [LD. CIT(A), FOR SHORT], DATED 24.04.2015 FOR ASSESSMENT YEAR 2010-1 1. GROUNDS TAKEN IN THIS APPEAL OF REVENUE ARE AS UNDER: 1. THAT THE LD. CIT(A)HAS ERRED IN NOT TAKING THE COGNIZANCE OF THE REMAND REPORT SUBMITTED BY THE AO WHEREIN IT WAS ST ATED THAT THE ASSESSEE/AR WAS ASKED TO FILE ITS EXPLANATION AND T HE ASSESSEE FAILED TO FILE ANY EXPLANATION/REPLY DESPITE THE ' FACT THAT THE ASSES SEE WAS GIVEN SIX OPPORTUNITIES SPANNING A PERIOD OF EIGHT MONTHS. TH US, THE LD. CIT(A) HAS NOT ACTED IN CONSONANCE WITH THE PROVISIONS OF RULE 46A WHILE DECIDING THE CASE. ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 2 OF 21 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 5, 44,314/- MADE BEING SPECULATION LOSS FALLS WITHIN THE PURVIEW EXPLANATI ON TO SEC. 73 OF THE ACT. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS . 43,98,987/- U/S 36(I)(III), BEING AMOUNT CHARGED AS INTEREST ON LOANS AND ADVAN CES. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 71 ,95,000/- MADE U/S 68, AS THE ASSESSEE FAILED TO DISCHARGE ITS ONUS TO PROVE THE GENUINENESS OF THE TRANSACTION BY WAY OF NAME, ADDRESS, CONFIRMATION, BANK A/C AND PAN DETAILS OF THE PERSONS/PARTY WHO HAVE GIVEN AMOUNT FOR PURC HASE OF PROPERTY. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 43 ,00,000/- MADE U/S 69 BEING UNEXPLAINED INVESTMENT, AS THE ASSESSEE FAILED TO S UBSTANTIATE ITS STAND DESPITE GIVEN REPETITIVE OPPORTUNITY. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE & IN LAW, THE LD. CIT(A) HAS ERRED IN REDUCING THE DISALLOWANCE MADE UNDER THE HEAD TELEPHONE RS. 1,24,603/- & CAR EXP. RS. 3,95,844/-, BEING PER SONAL IN NATURE IN THE HANDS OF THE DIRECTORS AND THEIR FAMILY MEMBERS, FROM 20% DISALLOWED BY THE AO TO 10%. 7. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 8. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDI CE TO EACH OTHER. 9. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR FOREGO ANY GROUND(S) OF THE APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. (B) ASSESSMENT ORDER DATED 30.03.2013 WAS PASSED BY TH E ASSESSING OFFICER (AO, FOR SHORT) U/S 143(3) OF INCOME TAX ACT, 1961 (I.T. AC T, FOR SHORT) WHEREIN TOTAL INCOME WAS ASSESSED AT RS. 2,55,15,803/- AS AGAINST RETURN INC OME OF RS. 22,52,024/-. THE ASSESSEE FILED APPEAL AGAINST THE AFORESAID ASSESSMENT ORDER DATED 30.03.2013 BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). THE ISSUES R AISED BY THE ASSESSEE IN THE APPEAL BEFORE THE LD. CIT(A) HAVE BEEN SUMMARIZED IN TABUL AR FORM AT PAGES 2 AND 3 OF THE ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 3 OF 21 APPELLATE ORDER DATED 24.04.2015 OF THE LD. CIT(A) AND IS REPRODUCED BELOW FOR THE EASE OF REFERENCE: ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 4 OF 21 (C) DURING THE APPELLATE PROCEEDINGS BEFORE THE LD. CI T(A) THE ASSESSEE FILED CERTAIN ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 5 OF 21 ADDITIONAL EVIDENCES / MATERIALS BEFORE THE LD. CIT( A). THE LD. CIT(A) CONSIDERED THESE ADDITIONAL EVIDENCES / MATERIALS AND PASSED THE IMPU GNED APPELLATE ORDER DATED 24.04.2015 IN WHICH SUBSTANTIAL RELIEF WAS ALLOWED TO THE ASSESSEE. THIS PRESENT APPEAL HAS BEEN FILED BY REVENUE AGAINST THE AFORESAID IMP UGNED APPELLATE ORDER DATED 24.04.2015 OF LD. CIT(A). IN THE COURSE OF APPELLA TE PROCEEDINGS IN INCOME TAX APPELLATE TRIBUNAL (ITAT, FOR SHORT), A PAPER BOOK WAS FILE D FROM THE ASSESSEES SIDE CONTAINING THE FOLLOWING PARTICULARS: 1. COPY OF COMPUTATION OF INCOME AND PROFIT & LOSS A/C FOR THE YEAR ENDED 31.03.2010. ( PAGES 1-8) 2. COPY OF SUBMISSIONS AND ADDITIONAL DOCUMENTS (PAG ES 9-73) AS REQUIRED FILED BEFORE CIT(A) (C.1) ON PERUSAL OF THE AFORESAID PAPER BOOK, IT IS FOUN D THAT ADMITTEDLY FROM THE ASSESSEES SIDE, THE ASSESSEE FILED ADDITIONAL DOCU MENTS DURING APPELLATE PROCEEDINGS BEFORE LD. CIT(A). (C.2) WRITTEN SUBMISSIONS, IN ADDITION TO A TABULAR CHAR T, WERE ALSO FILED FROM THE ASSESSEES SIDE, DURING THE APPELLATE PROCEEDINGS I N ITAT, ON MERITS OF THE QUANTUM ADDITIONS DELETED BY THE LD. CIT(A) IN AFORESAID IM PUGNED APPELLATE ORDER DATED 24.04.2015 AND RAISED BY REVENUE IN THE PRESENT APP EAL. (D) AT THE TIME OF HEARING BEFORE US, THE LD. DEPARTME NTAL REPRESENTATIVE (LD. DR, FOR SHORT) SUBMITTED IN CONNECTION WITH THE FIRST G ROUND OF APPEAL, THAT THE LD. CIT(A) ERRED IN ADMITTING ADDITIONAL EVIDENCES; HAVING REGA RD TO THE FACT THAT THE ASSESSEE HAD ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 6 OF 21 FAILED TO AVAIL OF NUMEROUS OPPORTUNITIES, SPANNING OVER A PROLONGED PERIOD OF TIME, PROVIDED BY THE AO TO THE ASSESSEE DURING THE ASSES SMENT PROCEEDINGS. THE LD. AUTHORIZED REPRESENTATIVE (LD. AR, FOR SHORT) FOR THE ASSESSEE, HOWEVER, CONTENDED THAT THE ADDITIONAL EVIDENCES / MATERIALS WERE SUBMI TTED TO THE LD. CIT(A) UNDER THE DIRECTIONS OF THE LD. CIT(A) AND NOT UNDER RULE 46A (1) OF INCOME TAX RULES, 1962 (I.T. RULES, FOR SHORT) . HE DREW ATTENTION TO RULE 46 A(4) OF I.T. RULES, AND SUBMITTED THAT RESTRICTIONS ON PRODUCTION OF ADDITIONAL EVIDENCES U NDER RULE 46A(1) ARE NOT APPLICABLE IN A SITUATION WHEN THE ADDITIONAL EVIDENCES / MATER IALS ARE SUBMITTED TO THE LD. CIT(A) UNDER DIRECTION OF LD. CIT(A) UNDER RULE 46A(4) OF I.T. RULES. WE HAVE GIVEN ANXIOUS CONSIDERATION TO THE RIVAL CONTENTIONS. ON CAREFUL PERUSAL OF THE AFORESAID IMPUGNED APPELLATE ORDER DATED 24.04.2015 OF THE LD. CIT(A), WE FIND THAT NOWHERE HE HAS STATED WHETHER THE ADDITIONAL EVIDENCES / MATERIALS WERE PR ODUCED BY THE ASSESSEE SUO-MOTO [AND WERE ADMITTED UNDER RULE 46A(1) OF I.T. RULES] OR IN PURSUANCE OF DIRECTION OF THE LD. CIT(A) UNDER RULE 46A(4) OF I.T. RULES. MOREOVE R, WE FIND THAT LD. CIT(A) HAS NOT DISCUSSED IN ANY DETAIL ANYWHERE IN HIS IMPUGNED AP PELLATE ORDER, AS TO WHICH SPECIFIC ADDITIONAL EVIDENCES / MATERIALS [SUBMITTED OR PRODU CED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A)] WERE R ELEVANT FOR GRANTING WHICH PARTICULAR GROUND(S) OF APPEAL BEFORE THE LD. CIT(A). TO THAT EXTENT, THEREFORE, THE ORDER OF THE LD. CIT(A) IS NOT COMPLIANT WITH THE NORM TO PASS S PEAKING ORDER. IN FACT, THE LD. CIT(A) HAS OMITTED TO EVEN MENTION THAT ADDITIONAL EVIDENCE S OR MATERIALS WERE ADMITTED OR ACCEPTED AT ALL; WHETHER UNDER RULE 46A(1) OR UNDER RULE 46A(4) OF I.T. RULES; ALTHOUGH, AS WE HAVE OBSERVED IN FOREGOING PARAGRAPH (C.1) OF THIS ORDER; ADMITTEDLY FROM THE ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 7 OF 21 ASSESSEES SIDE, THE ASSESSEE FILED ADDITIONAL DOCU MENTS DURING APPELLATE PROCEEDINGS BEFORE LD. CIT(A). LD. CIT(A) ALSO OMITTED TO MENTION WHICH SPECIFIC ITEM(S) OF ADDITIONAL EVIDENCES / MATERIALS WERE RELEVANT FOR W HICH SPECIFIC GROUND(S) OF APPEAL AND WHICH SPECIFIC ITEM(S) WEIGHED IN THE MIND OF THE L D. CIT(A) FOR GRANTING VARIOUS SPECIFIC RELIEFS TO THE ASSESSEE IN THE AFORESAID IMPUGNED A PPELLATE ORDER DATED 24.04.2015 OF LD. CIT(A). WE FURTHER FIND THAT IN EITHER CASE, WHETHER THE AD DITIONAL EVIDENCES / MATERIALS WERE FILED BY THE ASSESSEE SUO-MOTO AND A DMITTED UNDER RULE 46A(1) OF I.T. RULES ; OR THE SAME WERE SUBMITTED IN PURSUANCE OF THE DIRECTION OF THE LD. CIT(A) UNDER RULE 46A(4) OF I.T. RULES, THE LD. CIT(A) FAI LED TO CONFRONT THE AO WITH SUCH ADDITIONAL EVIDENCES / MATERIALS AND THE LD. CIT(A) FURTHER FAILED TO PROVIDE AN OPPORTUNITY TO THE AO TO EXAMINE THE ADDITIONAL EVID ENCES / MATERIALS AND TO PROVIDE EVIDENCES / MATERIALS IN REBUTTAL OF THE ADDITIONAL EVIDENCES / MATERIALS SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A). IN VIEW OF THE FO REGOING, WE FIND THAT THE AFORESAID IMPUGNED APPELLATE ORDER OF THE LD. CIT(A) SUFFERS FROM MULTIPLE INFIRMITIES. FIRSTLY, DUE TO FAILURE OF THE LD. CIT(A) TO STATE WHETHER THE A DDITIONAL EVIDENCES / MATERIALS WERE ADMITTED UNDER RULE 46A(1) OF I.T. RULES OR ACCEPTE D UNDER RULE 46A(4) OF I.T. RULES; THE ADMISSIBILITY OR OTHERWISE OF THE ADDITIONAL EVI DENCES / MATERIALS HAS BEEN RENDERED UNCERTAIN. THIS UNCERTAINTY HAS ARISEN BECAUSE RESTRICTIONS ON PRODUCTION OF ADDITIONAL EVIDENCES AS PRESCRIBED UNDER RULE 46A(1 ) OF I.T. RULES ARE NOT APPLICABLE WHEN LD. CIT(A) INVOKES RULES 46A(4) OF I.T. RULES. THEREFORE, WHETHER RULE 46A(4) OF I.T. RULES WAS INVOKED IS A CRITICAL FACTOR IN DECIDING ADMISSIBILITY OF ADDITIONAL EVIDENCES DURING APPELL ATE PROCEEDINGS BEFORE LD. ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 8 OF 21 CIT(A) . THE SECOND INFIRMITY IS, THAT IMPUGNED APPELLATE ORDER DATED 24.04.2015 OF LD. CIT(A) IS ALSO NOT FULLY COMPLIANT WITH THE NORM TO PASS SPEAKING ORDER, AS OBSERVED EARLIER IN THIS PARAGRAPH. THIRDLY, FAILURE AT TH E END OF THE LD. CIT(A) TO CONFRONT THE AO WITH AFORESAID ADDITIONAL EVIDENCES / MATERIALS, AND HIS FURTHER FAILURE TO PROVIDE REASONABLE OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE ADDITIONAL EVIDENCES / MATERIALS AND TO PROVIDE EVIDENCES / MATERIALS IN RE BUTTAL OF THE ADDITIONAL EVIDENCES / MATERIALS SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A); HAS CAUSED FURTHER INFIRMITY IN THE AFORESAID ORDER, HAVING BEEN PASSED, AS IT W AS, WITHOUT FOLLOWING THE WELL ESTABLISHED PRINCIPLE OF NATURAL JUSTICE. THIS IS S O, BECAUSE AO IS AN INTERESTED PARTY IN THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A) AND IN ACCORDANCE WITH WELL SETTLED PRINCIPLES OF NATURAL JUSTICE, LD. CIT (A) WAS REQUIRED TO CONFRONT THE AO, IF ANY ADDITIONAL EVIDENCES / MATERIALS SUB MITTED OR PRODUCED BY ASSESSEE WERE GOING TO BE USED BY LD. CIT(A) FOR GR ANTING RELIEF TO THE ASSESSEE. IF ANY ADDITIONAL EVIDENCES OR MATERIALS ARE GATHER ED BY THE LD. CIT(A) AT THE BACK OF THE AO, AND USED BY THE LD. C IT(A) TO GRANT RELIEF TO THE ASSESSEE, THIS IS VIOLATIVE OF THE PRINCIPLE OF NAT URAL JUSTICE. THE ASSESSING OFFICER IS, IT GOES WITHOUT SAYING, AN INTERESTED P ARTY IN THE APPELLATE PROCEEDINGS BEFORE LD. CIT(A). THE ROLE OF THE ASSESSING OFFICER AS A N INTERESTED PARTY IN APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A) IS, MOREOVER, SPE CIFICALLY RECOGNIZED IN SECTIONS 250 OF I.T. ACT, WITH PARTICULAR REFERENCE TO SUB SECTI ONS 1, 2 AND 4 OF SECTION 250 OF I.T. ACT. FURTHER, THIS IS ALSO RECOGNIZED IN RULE 46A OF I.T. RULES, WITH PARTICULAR REFERENCE TO RULE 46A(3) OF I.T. RULES. FOR EASE OF REFEREN CE, SECTION 250 OF I.T. ACT AND RULE ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 9 OF 21 46A OF I.T. RULES ARE REPRODUCED AS UNDER: SECTION 250 OF INCOME TAX ACT, 1961 PROCEDURE IN APPEAL. 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 APP EAL 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 AUTHOR IZED REPRESENTATIVE ; (B) THE [ASSESSING] OFFICER, EITHER IN PERSON OR BY A REPRESENTATIVE. (3) THE [COMMISSIONER (APPEALS)] SHALL HAVE THE PO WER TO ADJOURN THE HEARING OF THE APPEAL FROM TIME TO TIME. (4) THE [COMMISSIONER (APPEALS)] MAY, BEFORE DISP OSING OF ANY APPEAL, MAKE SUCH FURTHER INQUIRY AS HE THINKS FIT, OR MAY DIREC T THE [ASSESSING] OFFICER TO MAKE FURTHER INQUIRY AND REPORT THE RESULT OF THE S AME TO THE [COMMISSIONER (APPEALS)]. (5) THE [COMMISSIONER (APPEALS)] MAY, AT THE HEARI NG OF AN APPEAL, ALLOW THE APPELLANT TO GO INTO ANY GROUND OF APPEAL NOT SPECI FIED IN THE GROUNDS OF APPEAL, IF THE [COMMISSIONER (APPEALS)] IS SATISFI ED THAT THE OMISSION OF THAT GROUND FROM THE FORM OF APPEAL WAS NOT WILFUL OR UN REASONABLE. (6) THE ORDER OF THE [COMMISSIONER (APPEALS)] DISPO SING OF THE APPEAL SHALL BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINA TION, THE DECISION THEREON AND THE REASON FOR THE DECISION. [(6A) IN EVERY APPEAL, THE COMMISSIONER (APPEALS), WHERE IT IS POSSIBLE, MAY HEAR AND DECIDE SUCH APPEAL WITHIN A PERIOD OF ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH SUCH APPEAL IS FILED BEFORE HIM UNDER SUB-SECTION (1) OF SECTION 246A.] (7) ON THE DISPOSAL OF THE APPEAL, THE [COMMISSIONE R (APPEALS)] SHALL COMMUNICATE THE ORDER PASSED BY HIM TO THE ASSESSEE AND TO THE [PRINCIPAL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER OR [PRINC IPAL COMMISSIONER OR] COMMISSIONER]. RULE 46A OF INCOME TAX RULES, 1962 46(A). (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODU CE BEFORE THE [DEPUTY COMMISSIONER OF (APPEALS) [OR, AS THE CASE MAY BE C OMMISSIONER (APPEALS)], ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER TH AN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE [ASSESSING OFFICER], EXCEPT ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 10 OF 21 IN THE FOLLOWING CIRCUMSTANCES, NAMELY:- (A) WHETHER THE [ASSESSING OFFICER] HAS REFUSED TO ADMI T EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON T O PRODUCE BY THE [ASSESSING OFFICER]; OR (C)WHETHER THE APPELLANT WAS PREVENTED BY SUFFICIEN T CAUSE FROM PRODUCING BEFORE THE [ASSESSING OFFICER]ANY EVIDE NCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR (D) WHETHER THE [ASSESSING OFFICER ] HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO TH E APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1 ) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, TH E COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS A DMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE(1) UNLESS THE [ASSESSING OF FICER] HAS BEEN ALLOWED A REASONABLE OPPORTUNITY- (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS -EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITN ESS 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, TH E COMMISSIONER (APPEALS) TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDIN G THE ENHANCEMENT OF THE ASSESSMENT OF PENALTY (WHETHER O N HIS OWN MOTION OR ON THE REQUEST OF THE [ASSESSING OFFICER] ) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSI TION OF PENALTY UNDER SECTION 271.] ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 11 OF 21 (D) BESIDES THE AFORESAID STATUTORY PROVISIONS UNDER S ECTION 250 OF I.T. ACT AND RULE 46A OF I.T. RULES, THE ROLE AND THE RIGHTS OF THE ASSES SING OFFICER DURING APPELLATE PROCEEDINGS BEFORE LD. CIT(A) HAVE ALSO FOUND EXPRESSION AND RE COGNITION IN NUMEROUS JUDICIAL PRECEDENTS AND DECIDED CASES. WE MAY HIGHLIGHT THE ORDER OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MANISH BUILD WELL (P.) LTD. [2011] 16 TAXMANN.COM 27(DELHI); WHICH WAS CONSIDERED BY CO-ORDINATE BENCH OF ITAT I N ITO VS. PARDEEPA RANI [2016] 73 TAXMANN.COM 392 (DELHI-TRIB.). RELEVANT PORTIONS O F THESE ORDERS ARE REPRODUCED AS UNDER: CIT VS. MANISH BUILD WELL (P.) LTD. 16 TAXMANN.COM 27(DELHI) 21 . IN OUR OPINION, SUBSTANTIAL QUESTIONS OF LAW DO AR ISE OUT OF THE ORDER OF THE TRIBUNAL IN RESPECT OF ITS DECISION REGARDING THE A DDITION OF RS. 1,61,67,600/- MADE UNDER SECTION 68. WE, ACCORDINGLY, RE-FRAME THE FOL LOWING SUBSTANTIAL QUESTIONS OF LAW:- '1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND ON A PROPER INTERPRETATION OF RULE 46A OF THE INCOME TAX RULES, 1962, THE TRIBUNAL WAS RIGHT IN LAW IN TAKING A DECISION ON T HE MERITS OF THE ADDITION MADE UNDER SECTION 68 WITHOUT AFFORDING AN OPPORTUNITY TO THE ASSESSING OFFICER OF BEING HEARD AS ENVISAGED I N SUB-RULE (3) OF RULE 46A?' 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT SINCE THE CIT (A) POSSESSES CO-TERMINUS POWERS OVER THE ASSESSMENT APART FROM A PPELLATE POWERS, THERE WAS NO VIOLATION OF RULE 46A COMMITTED BY HIM ?' 22 . AS WE HAVE WITH THE CONSENT OF THE LEARNED COUNSE L, HEARD THEM ON MERITS, WE PROCEED TO DECIDE THE AFORESAID SUBSTANTIAL QUESTIO NS OF LAW. SINCE THE CIT (A) HIMSELF REFERS TO RULE 46A AND HAS ALSO ADMITTED THAT THE C ONFIRMATION LETTERS ADDUCED BY THE ASSESSEE BEFORE HIM WERE TECHNICALLY FRESH EVIDENCE , IT IS NOT POSSIBLE TO ACCEPT THE PLEA OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE CI T (A), IN EXAMINING THE CONFIRMATION LETTERS, WAS EXERCISING HIS INDEPENDENT POWERS OF E NQUIRY UNDER SUB-SECTION (4) OF SECTION 250 OF THE INCOME TAX ACT. IT IS TRUE THAT THE CIT (A) AS FIRST APPELLATE AUTHORITY HAS CONTERMINOUS POWERS OVER THE SOURCES OF INCOME CONSTITUTING THE SUBJECT MATTER OF THE ASSESSMENT, EXCEPT THE POWER TO TACKLE NEW SOUR CES OF INCOME NOT CONSIDERED BY THE ASSESSING OFFICER, AND CAN DO WHAT THE ASSESSING OF FICER CAN DO AND CAN DIRECT THE ASSESSING OFFICER TO DO WHAT HE HAS FAILED TO DO, A S HELD BY THE SUPREME COURT IN THE CASE OF CIT V. KANPUR COAL SYNDICATE , [1964] 53 ITR 225 , BUT IN THIS CASE, THE CIT (A) DID NOT EXERCISE THIS RIGHT. THIS POWER, WHICH IS R ECOGNIZED IN SUB-SECTION (4) OF SECTION ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 12 OF 21 250, HAS TO BE EXERCISED BY THE CIT (A) AND THERE S HOULD BE MATERIAL ON RECORD TO SHOW THAT HE, WHILE DISPOSING OF THE APPEAL, HAD DIRECTE D FURTHER ENQUIRY AND CALLED FOR THE CONFIRMATION LETTERS FROM THE ASSESSEE EVEN IN RESP ECT OF RECEIPT OF MONIES FROM CUSTOMERS BY WAY OF CHEQUES. RULE 46A IS A PROVISIO N IN THE INCOME TAX RULES, 1962 WHICH IS INVOKED, ON THE OTHER HAND, BY THE ASSESSE E WHO IS IN AN APPEAL BEFORE THE CIT (A). ONCE THE ASSESSEE INVOKES RULE 46A AND PRAYS F OR ADMISSION OF ADDITIONAL EVIDENCE BEFORE THE CIT (A), THEN THE PROCEDURE PRESCRIBED I N THE SAID RULE HAS TO BE SCRUPULOUSLY FOLLOWED. THE FACT THAT SUB-SECTION (4) OF SECTION 250 CONFERS POWERS ON THE CIT (A) TO CONDUCT AN ENQUIRY AS HE THINKS FIT, WHILE DISPOSIN G OF THE APPEAL, CANNOT BE RELIED UPON TO CONTEND THAT THE PROCEDURAL REQUIREMENTS OF RULE 46A NEED NOT BE COMPLIED WITH. IF SUCH A PLEA OF THE ASSESSEE IS ACCEPTED, IT WOULD R EDUCE RULE 46A TO A DEAD LETTER BECAUSE IT WOULD THEN BE OPEN TO EVERY ASSESSEE TO FURNISH ADDITIONAL EVIDENCE BEFORE THE CIT (A) AND THEREAFTER CONTEND THAT THE EVIDENCE SHOULD BE ACCEPTED AND TAKEN ON RECORD BY THE CIT (A) BY VIRTUE OF HIS POWERS OF ENQUIRY UNDER SU B-SECTION (4) OF SECTION 250. THIS WOULD MEAN IN TURN THAT THE REQUIREMENT OF RECORDIN G REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE, THE REQUIREMENT OF EXAMINING WHETHER THE CONDITIONS FOR ADMITTING THE ADDITIONAL EVIDENCE ARE SATISFIED, THE REQUIREMENT THAT THE ASSESSING OFFICER SHOULD BE ALLOWED A REASONABLE OPPORTUNITY OF EXAMINING THE E VIDENCE ETC. CAN BE THROWN TO THE WINDS, A POSITION WHICH IS WHOLLY UNACCEPTABLE AND MAY RESULT IN UNACCEPTABLE AND UNJUST CONSEQUENCES. THE FUNDAMENTAL RULE WHICH IS VALID I N ALL BRANCHES OF LAW, INCLUDING INCOME TAX LAW, IS THAT THE ASSESSEE SHOULD ADDUCE THE ENTIRE EVIDENCE IN HIS POSSESSION AT THE EARLIEST POINT OF TIME. THIS ENSURES FULL, F AIR AND DETAILED ENQUIRY AND VERIFICATION. A 7-JUDGE BENCH OF THE SUPREME COURT IN KESHAV MILLS CO. LTD. V. CIT [1965] 56 ITR 365 HAD OBSERVED AS UNDER:- 'PROCEEDINGS TAKEN FOR THE RECOVERY OF TAX UNDER TH E PROVISIONS OF THE ACT ARE NATURALLY INTENDED TO BE OVER WITHOUT UNNECESSARY DELAY, AND SO, IT IS THE DUTY OF THE PARTIES, BOTH THE DEPARTMENT AND THE ASSESSEE, TO LEAD ALL THEIR EVIDENCE AT THE STAGE WHEN THE MATTER IS IN CHARGE OF THE INCOME-TAX OFFICER.' 23 . IT IS FOR THE AFORESAID REASON THAT RULE 46A STAR TS IN A NEGATIVE MANNER BY SAYING THAT AN APPELLANT BEFORE THE CIT (A) SHALL NOT BE ENTITL ED TO PRODUCE BEFORE HIM ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENC E ADDUCED BY HIM BEFORE THE ASSESSING OFFICER. AFTER MAKING SUCH A GENERAL STAT EMENT, WHICH IS IN CONSONANCE WITH THE PRINCIPLE STATED IN THE ABOVE JUDGMENT, EXCEPTIONS HAVE BEEN CARVED OUT THAT IN CERTAIN CIRCUMSTANCES IT WOULD BE OPEN TO THE CIT (A) TO AD MIT ADDITIONAL EVIDENCE. THEREFORE, ADDITIONAL EVIDENCE CAN BE PRODUCED AT THE FIRST AP PELLATE STAGE WHEN CONDITIONS STIPULATE IN THE RULE 46A ARE SATISFIED AND A FINDING IS RECO RDED. RULE 46 A READS:- 'PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE [DEPU TY COMMISSIONER (APPEALS)] [AND COMMISSIONER (APPEALS)]. 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRO DUCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONE R (APPEALS)], ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PRODUC ED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE [ASSESSING OFFICER], EXCEPT IN THE FOLLOWING CIRCUMSTANCES, NAMELY : ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 13 OF 21 ( 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 CAU SE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER] ; OR ( C ) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCING BEFORE THE [ASSESSING OFFICER] ANY EVIDENCE WHICH I S RELEVANT TO ANY GROUND OF APPEAL ; OR ( D ) WHERE THE [ASSESSING OFFICER] HAS MADE THE ORDER AP PEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO A DDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1 ) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONE R (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE [ASSESSING OFFICER] HAS BEEN ALLOWED A REASONAB LE OPPORTUNITY ( A ) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS-EXA MINE 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 COMMISSIONE R (APPEALS)] TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDIN G THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETHER ON HIS OWN MOTION OR ON THE REQUES T OF THE [ASSESSING OFFICER]) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271.] WE ARE HIGHLIGHTING THESE ASPECTS ONLY TO PRESS HOM E THE POINT THAT THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFOR E ADDITIONAL EVIDENCE IS ADMITTED AND EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HAS TO BE STRICTLY COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXERCISED AND NOT EXE RCISED IN A ROUTINE OR CURSORY MANNER. A DISTINCTION SHOULD BE RECOGNIZED AND MAINTAINED B ETWEEN A CASE WHERE THE ASSESSEE INVOKES RULE 46A TO ADDUCE ADDITIONAL EVIDENCE BEFO RE THE CIT (A) AND A CASE WHERE THE CIT (A), WITHOUT BEING PROMPTED BY THE ASSESSEE, WH ILE DEALING WITH THE APPEAL, CONSIDERS IT FIT TO CAUSE OR MAKE A FURTHER ENQUIRY BY VIRTUE OF THE POWERS VESTED IN HIM UNDER SUB-SECTION (4) OF SECTION 250. IT IS ONLY WH EN HE EXERCISES HIS STATUTORY SUO MOTO POWER UNDER THE ABOVE SUB-SECTION THAT THE REQUIREM ENTS OF RULE 46A NEED NOT BE FOLLOWED. ON THE OTHER HAND, WHENEVER THE ASSESSEE WHO IS IN APPEAL BEFORE HIM INVOKES ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 14 OF 21 RULE 46A, IT IS INCUMBENT UPON THE CIT (A) TO COMPL Y WITH THE REQUIREMENTS OF THE RULE STRICTLY. 24 . IN THE PRESENT CASE, THE CIT (A) HAS OBSERVED THA T THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED BECAUSE THE ASSESSEE WAS PREVENTED BY ADDU CING THEM BEFORE THE ASSESSING OFFICER. THIS OBSERVATION TAKES CARE OF CLAUSE (C) OF SUB-RULE (1) OF RULE 46A. THE OBSERVATION OF THE CIT (A) ALSO TAKES CARE OF SUB-R ULE (2) UNDER WHICH HE IS REQUIRED TO RECORD HIS REASONS FOR ADMITTING THE ADDITIONAL EVI DENCE. THUS, THE REQUIREMENT OF SUB- RULES (1) AND (2) OF RULE 46A HAVE BEEN COMPLIED WI TH. HOWEVER, SUB-RULE (3) WHICH INTERDICTS THE CIT (A) FROM TAKING INTO ACCOUNT ANY EVIDENCE PRODUCED FOR THE FIRST TIME BEFORE HIM UNLESS THE ASSESSING OFFICER HAS HAD A R EASONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE AND REBUT THE SAME, HAS NOT BEEN COMPL IED WITH. THERE IS NOTHING IN THE ORDER OF THE CIT (A) TO SHOW THAT THE ASSESSING OFF ICER WAS CONFRONTED WITH THE CONFIRMATION LETTERS RECEIVED BY THE ASSESSEE FROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND ASKED FOR COMMENTS. THUS, THE END RE SULT HAS BEEN THAT ADDITIONAL EVIDENCE WAS ADMITTED AND ACCEPTED AS GENUINE WITHO UT THE ASSESSING OFFICER FURNISHING HIS COMMENTS AND WITHOUT VERIFICATION. SINCE THIS I S AN INDISPENSABLE REQUIREMENT, WE ARE OF THE VIEW THAT THE TRIBUNAL OUGHT TO HAVE RESTORE D THE MATTER TO THE CIT (A) WITH THE DIRECTION TO HIM TO COMPLY WITH SUB-RULE (3) OF RUL E 46A. IN OUR OPINION AND WITH RESPECT, THE ERROR COMMITTED BY THE TRIBUNAL IS THA T IT PROCEEDED TO MIX UP THE POWERS OF THE CIT (A) UNDER SUB-SECTION (4) OF SECTION 250 WI TH THE POWERS VESTED IN HIM UNDER RULE 46A. THE TRIBUNAL SEEMS TO HAVE OVERLOOKED SUB -RULE (4) OF RULE 46A WHICH ITSELF TAKES NOTE OF THE DISTINCTION BETWEEN THE POWERS CO NFERRED BY THE CIT (A) UNDER THE STATUTE WHILE DISPOSING OF THE ASSESSEE'S APPEAL AN D THE POWERS CONFERRED UPON HIM UNDER RULE 46A. THE TRIBUNAL ERRED IN ITS INTERPRETATION OF THE PROVISIONS OF RULE 46A VIS--VIS SECTION 250(4). ITS VIEW THAT SINCE IN ANY CASE THE CIT (A), BY VIRTUE OF HIS CONTERMINOUS POWERS OVER THE ASSESSMENT ORDER, WAS EMPOWERED TO CALL FOR ANY DOCUMENT OR MAKE ANY FURTHER ENQUIRY AS HE THINKS FIT, THERE WAS NO VIOL ATION OF RULE 46A IS ERRONEOUS. THE TRIBUNAL APPEARS TO HAVE NOT APPRECIATED THE DISTIN CTION BETWEEN THE TWO PROVISIONS. IF THE VIEW OF THE TRIBUNAL IS ACCEPTED, IT WOULD MAKE RULE 46A OTIOSE AND IT WOULD OPEN UP THE POSSIBILITY OF THE ASSESSEES' CONTENDING THA T ANY ADDITIONAL EVIDENCE SOUGHT TO BE INTRODUCED BY THEM BEFORE THE CIT (A) CANNOT BE SUB JECTED TO THE CONDITIONS PRESCRIBED IN RULE 46A BECAUSE IN ANY CASE THE CIT (A) IS VEST ED WITH CONTERMINOUS POWERS OVER THE ASSESSMENT ORDERS OR POWERS OF INDEPENDENT ENQU IRY UNDER SUB-SECTION (4) OF SECTION 250. THAT IS A CONSEQUENCE WHICH CANNOT AT ALL BE C OUNTENANCED.' ITO VS PARDEEPA RANI 73 TAXMANN.COM 392 (DELHI-TRIB .) 6.3 WE ARE OF THE VIEW THAT THE CIT(A) AFTER OVER-RULI NG THE OBJECTION OF THE AO ON THE ADMISSIBILITY OF THE FRESH EVIDENCES WAS REQ UIRED TO COMMUNICATE THE DECISION TO ADMIT THE EVIDENCE TO THE AO AND PROVID E HIM A REASONABLE OPPORTUNITY TO REBUT THE SAME. IN THE ABSENCE OF ANY SUCH EXERC ISES THE ORDER IS IN VIOLATION OF THE STATUTORY RULES AND IS OPEN TO THE CHALLENGE OF BEING PERVERSE. SUPPORT IS DRAWN FROM THE DECISION OF JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT V. MANISH BUILDWELL (P.) LTD.[2012]204 TAXMAN106/[2011]16 TAX MANN.COM 27 (DELHI). A ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 15 OF 21 PERUSAL OF THE SAID DECISION SHOWS THAT CONSIDERING THE NON-FULFILLMENT OF THE REQUIREMENTS SET OUT IN SUB-RULE (3) OF RULE 46A TH E HON'BLE COURT WAS PLEASED TO RESTORE THE ISSUE BACK TO THE CIT(A) DIRECTING THE SAID AUTHORITY TO ADDRESS THE SHORTCOMINGS. THE HON'BLE COURT TOOK INTO CONSIDERA TION THE OFF REPEATED ARGUMENT IN SUCH CASES BY NOTING THAT IT IS TRUE THAT THE PO WERS OF CIT(A) AS FIRST APPELLATE AUTHORITY ARE CO-TERMINOUS WITH THAT OF THE AO BY D RAWING ATTENTION TO THE DISTINCTION THAT THE POWERS OF THE CIT(A) AS FIRST APPELLATE AUTHORITY ARE CO- TERMINOUS POWER OVER THE SOURCES OF INCOME CONSTITU TING THE SUBJECT MATTER OF THE ASSESSMENT, EXCEPT THE POWER TO TOUCH NEW SOURCES O F INCOME NOT CONSIDERED BY THE ASSESSING OFFICER. THE JURISDICTIONAL HIGH COURT HA S HELD THAT THE CIT(A) CAN ALSO DO AND CAN DIRECT THE ASSESSING OFFICER TO DO WHAT HE HAS FAILED TO DO, AS HELD BY THE SUPREME COURT IN THE CASE OF CIT V. KANPUR COAL SYNDICATE[1964] 53 ITR 225. THE HON'BLE COURT FOUND THAT THE CIT (A) IN THE FAC TS BEFORE THE COURT WHICH FACT IS EVIDENT FROM THE FACTS OF THE PRESENT CASE ALSO THA T THE CIT(A) DID NOT EXERCISE THE POWERS RECOGNIZED IN SUB-SECTION (4) OF SECTION 250 AND HAS TO BE EXERCISED BY THE CIT (A). THE HON'BLE COURT HAS HELD THAT IN ORDER T O SHOW THAT THE POWER UNDER SUB-SECTION (4) TO SECTION 250 IS BEING EXERCISED T HERE SHOULD BE MATERIAL ON RECORD TO SHOW THAT WHILE DISPOSING OF THE APPEAL, THE CIT (A) HAD DIRECTED FURTHER ENQUIRY AND CALLED FOR THE CONFIRMATION LETTERS FROM THE AS SESSEE EVEN IN RESPECT OF RECEIPT OF MONIES FROM CUSTOMERS BY WAY OF CHEQUES. RULE 46A, IT WAS OBSERVED WAS A PROVISION IN THE INCOME TAX RULES, 1962 WHICH IS IN VOKED, ON THE OTHER HAND, BY THE ASSESSEE WHO IS IN AN APPEAL BEFORE THE CIT (A) . ONCE THE ASSESSEE INVOKES RULE 46A AND PRAYS FOR ADMISSION OF ADDITIONAL EVIDENCE BEFORE THE CIT (A), THEN THE PROCEDURE PRESCRIBED IN THE SAID RULE IT HAS BEEN H ELD HAS TO BE SCRUPULOUSLY FOLLOWED. THE FACT THAT SUB-SECTION (4) OF SECTION 250 CONFERS POWERS ON THE CIT (A) TO CONDUCT AN ENQUIRY AS HE THINKS FIT, WHILE D ISPOSING OF THE APPEAL THE HON'BLE COURT HELD CANNOT BE RELIED UPON TO CONTEND THAT TH E PROCEDURAL REQUIREMENTS OF RULE 46A NEED NOT BE COMPLIED WITH. THEIR LORDSHIPS HAVE HELD THAT IF SUCH A PLEA OF THE ASSESSEE IS ACCEPTED THEN IT WOULD REDUCE RU LE 46A TO A DEAD LETTER BECAUSE IT WOULD THEN BE OPEN TO EVERY ASSESSEE TO FURNISH ADD ITIONAL EVIDENCE BEFORE THE CIT (A) AND THEREAFTER CONTEND THAT THE EVIDENCE SHOULD BE ACCEPTED AND TAKEN ON RECORD BY THE CIT (A) BY VIRTUE OF HIS POWERS OF ENQUIRY U NDER SUB-SECTION (4) OF SECTION 250. THE COURT HELD THAT THIS WOULD MEAN IN TURN TH AT: (I) THE REQUIREMENT OF RECORDING REASONS FOR ADMITTING THE ADDITIONAL EVID ENCE; (II) THE REQUIREMENT OF EXAMINING WHETHER THE CONDITIONS FOR ADMITTING THE ADDITIONAL EVIDENCE ARE SATISFIED; AND (III) THE REQUIREMENT THAT THE ASSES SING OFFICER SHOULD BE ALLOWED A REASONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE ET C. CAN ALL BE THROWN TO THE WINDS, A POSITION WHICH THE HON'BLE COURT HELD WAS WHOLLY UNACCEPTABLE AND MAY RESULT IN UNACCEPTABLE AND UNJUST CONSEQUENCES. THE HON'BLE COURT HELD THAT THE PROCEDURAL REQUIREMENTS MENTIONED IN THE RULE MUST BE STRICTLY COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXERCISED AND NOT EXE RCISED IN A ROUTINE OR CURSORY MANNER. THE TRIBUNAL IN VIEW THEREOF IN THE FACTS B EFORE THE COURT WAS FAULTED WITH FOR OVER-LOOKING THE REQUIREMENTS OF SUB-RULE (3) O F RULE 46A AND CONFUSING IT WITH SUB-RULE (4) OF RULE 46A. ADDRESSING THE RATIO NALE FOR THE RULE THE HON'BLE COURT OBSERVED THAT THE FUNDAMENTAL RULE WHICH IS V ALID IN ALL BRANCHES OF LAW, INCLUDING INCOME TAX LAW IS THAT THE ASSESSEE SHOUL D ADDUCE THE ENTIRE EVIDENCE IN ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 16 OF 21 HIS POSSESSION AT THE EARLIEST POINT OF TIME. THIS ENSURES FULL, FAIR AND DETAILED ENQUIRY AND VERIFICATION. REFERRING TO THE DECISION IN KESHAV MILLS CO. LTD. V. CIT [1965] 56 ITR 365 (SC), 7-JUDGE BENCH JUDGEMENT OF THE SUPREME COURT, IT WAS OBSERVED THAT THE COURT HELD THAT 'PR OCEEDINGS TAKEN FOR THE RECOVERY OF TAX UNDER THE PROVISIONS OF THE ACT ARE NATURALL Y INTENDED TO BE OVER WITHOUT UNNECESSARY DELAY, AND SO, IT IS THE DUTY OF THE PA RTIES, BOTH THE DEPARTMENT AND THE ASSESSEE, TO LEAD ALL THEIR EVIDENCE AT THE STAGE W HEN THE MATTER IS IN CHARGE OF THE INCOME-TAX OFFICER.' IT WAS HELD BY THE JURISDICTIO NAL HIGH COURT THAT IT IS FOR THE SAID REASON THAT RULE 46A STARTS IN A NEGATIVE MANN ER BY SAYING THAT AN APPELLANT BEFORE THE CIT (A) SHALL NOT BE ENTITLED TO PRODUCE BEFORE HIM ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENC E PLACED BY HIM BEFORE THE ASSESSING OFFICER. THEIR LORDSHIPS HELD THAT AFTER MAKING THE SAID GENERAL STATEMENT, WHICH WAS FOUND TO BE IN CONSONANCE WITH THE PRINCI PLE STATED IN THE AFORESAID JUDGMENT OF THE APEX COURT, EXCEPTIONS HAVE BEEN CA RVED OUT SETTING OUT UNDER WHAT CIRCUMSTANCES IT WOULD BE OPEN TO THE CIT (A) TO ADMIT ADDITIONAL EVIDENCE. THE COURT HELD THAT ADDITIONAL EVIDENCE CAN ONLY TH EN BE PRODUCED AT THE FIRST APPELLATE STAGE WHEN CONDITIONS STIPULATED IN THE R ULE 46A ARE SATISFIED AND A FINDING IS RECORDED TO THAT EXTENT WHICH MAKES IT C LEAR IN UNAMBIGUOUS LANGUAGE THAT FIRSTLY THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFORE ADDITIONAL EVIDENCE CAN BE ADMITTED AND THEREAFTER EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HAS TO BE STRICTLY COMPLIED W ITH SO THAT THE RULE IS MEANINGFULLY EXERCISED AND NOT EXERCISED IN A ROUTI NE OR CURSORY MANNER. THEIR LORDSHIPS HAVE HELD THAT A DISTINCTION SHOULD BE RE COGNIZED AND MAINTAINED BETWEEN A CASE WHERE THE ASSESSEE INVOKES RULE 46A TO ADDUC E ADDITIONAL EVIDENCE BEFORE THE CIT (A) AND A CASE WHERE THE CIT (A), WITHOUT B EING PROMPTED BY THE ASSESSEE, WHILE DEALING WITH THE APPEAL, CONSIDERS IT FIT TO CAUSE OR MAKE A FURTHER ENQUIRY BY VIRTUE OF THE POWERS VESTED IN HIM UNDER SUB-SECTIO N (4) OF SECTION 250. IT IS ONLY WHEN THE CIT(A) EXERCISES HIS STATUTORY POWER SUO M OTO UNDER THE ABOVE SUB- SECTION THAT THE REQUIREMENTS OF RULE 46A NEED NOT BE FOLLOWED. ON THE OTHER HAND, WHENEVER THE ASSESSEE WHO IS IN APPEAL BEFORE HIM I NVOKES RULE 46A, IT IS INCUMBENT UPON THE CIT (A) TO COMPLY WITH THE REQUI REMENTS OF THE RULE STRICTLY. 6.4 IN THE FACTS OF THE CASE BEFORE THE HON'BLE HIGH C OURT IT WAS FOUND THAT THE CIT(A) HAD RECORDED THAT THE ADDITIONAL EVIDENCE SH OULD BE ADMITTED BECAUSE THE ASSESSEE WAS PREVENTED BY ADDUCING THEM BEFORE THE ASSESSING OFFICER. THE SAID OBSERVATION IT WAS HELD WOULD TAKE CARE OF CLAUSE ( C) OF SUB-RULE (1) OF RULE 46A. THE OBSERVATION OF THE CIT (A) IT WAS HELD WOULD AL SO TAKE CARE OF SUB-RULE (2) UNDER WHICH HE IS REQUIRED TO RECORD HIS REASONS FO R ADMITTING THE ADDITIONAL EVIDENCE. THUS, THE REQUIREMENT OF SUB-RULES (1) AN D (2) OF RULE 46A IT WAS HELD HAD BEEN COMPLIED WITH. HOWEVER, THE HON'BLE COURT FOUND THAT SUB-RULE (3) WHICH INTERDICTS THE CIT (A) FROM TAKING INTO ACCOUNT ANY EVIDENCE PRODUCED FOR THE FIRST TIME BEFORE HIM UNLESS THE ASSESSING OFFICER HAS HA D A REASONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE AND REBUT THE SAME, HAD NOT BEEN COMPLIED WITH. THE COURT FOUND THAT THERE WAS NOTHING IN THE ORDER OF THE CI T (A) TO SHOW THAT THE ASSESSING OFFICER WAS CONFRONTED WITH THE CONFIRMATION LETTER S RECEIVED BY THE ASSESSEE FROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND A SKED FOR COMMENTS. THUS, THE ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 17 OF 21 END RESULT THE HON'BLE COURT HELD WAS THAT ADDITION AL EVIDENCE WERE ADMITTED AND ACCEPTED AS GENUINE WITHOUT THE ASSESSING OFFICER F URNISHING HIS COMMENTS AND WITHOUT VERIFICATION. IN THESE CIRCUMSTANCES THE CO URT HELD: 'SINCE THIS IS AN INDISPENSABLE REQUIREMENT, WE ARE OF THE VIEW THAT THE TRIBUNAL OUGHT TO HAVE RESTORED THE MATTER TO THE CIT (A) WI TH THE DIRECTION TO HIM TO COMPLY WITH SUB-RULE (3) OF RULE 46A. IN OUR OPINIO N AND WITH RESPECT, THE ERROR COMMITTED BY THE TRIBUNAL IS THAT IT PROCEEDED TO M IX UP THE POWERS OF THE CIT (A) UNDER SUB- SECTION (4) OF SECTION 250 WITH THE POWERS VESTED IN HIM UNDER RULE 46A.' COMMENTING UPON THE ORDER OF THE ITAT TH EIR LORDSHIPS FURTHER HELD THAT 'THE TRIBUNAL ERRED IN ITS INTERPRETATION OF T HE PROVISIONS OF RULE 46A VIS-- VIS SECTION 250(4). ITS VIEW THAT SINCE IN ANY CASE THE CIT (A), BY VIRTUE OF HIS CONTERMINOUS POWERS OVER THE ASSESSMENT ORDER, WAS EMPOWERED TO CALL FOR ANY DOCUMENT OR MAKE ANY FURTHER ENQUIRY AS HE THINKS F IT, THERE WAS NO VIOLATION OF RULE 46A IS ERRONEOUS. THE TRIBUNAL APPEARS TO HAVE NOT APPRECIATED THE DISTINCTION BETWEEN THE TWO PROVISIONS. IF THE VIEW OF THE TRIBUNAL IS ACCEPTED, IT WOULD MAKE RULE 46A OTIOSE AND IT WOULD OPEN UP THE POSSIBILITY OF THE ASSESSEES' CONTENDING THAT ANY ADDITIONAL EVIDENCE SOUGHT TO BE INTRODUCED BY THEM BEFORE THE CIT (A) CANNOT BE SUBJECTED TO THE CONDITIONS PRESCRIBED IN RULE 46A BECAUSE IN ANY CASE THE CIT (A) IS VESTED WITH CONTERMINOUS POWERS OVER THE ASSESSMENT ORDERS OR POWERS OF INDEPENDENT ENQU IRY UNDER SUB-SECTION (4) OF SECTION 250. THAT IS A CONSEQUENCE WHICH CANNOT AT ALL BE COUNTENANCED.' (D.1) AS WE DISCUSSED EARLIER IN PARAGRAPH (D) OF THIS APPELLATE ORDER, THE AFORESAID IMPUGNED APPELLATE ORDER DATED 24.04.2015 OF LD. CI T(A) SUFFERS FROM THREE INFIRMITIES. TO SUMMARIZE, FIRSTLY, THE ADMISSIBILITY OR OTHERWI SE OF ADDITIONAL EVIDENCES / MATERIALS RELIED ON BY THE LD. CIT(A) IS RENDERED UNCERTAIN. SECONDLY, THE ORDER OF THE LD. CIT(A) IS A NON-SPEAKING ORDER. THIRDLY, THE CONCLUSIONS ARRIVED AT BY THE LD. CIT(A) LACK CREDIBILITY ON ACCOUNT OF FAILURE ON THE PART OF LD . CIT(A) TO OBSERVE THE PRINCIPLES OF NATURAL JUSTICE IN SO FAR AS PROVIDING REASONABLE O PPORTUNITIES TO THE AO, AN INTERESTED PARTY IN APPELLATE PROCEEDINGS BEFORE CIT(A), IS CO NCERNED. IN VIEW OF THESE TRIPLE INFIRMITIES, THE AFORESAID IMPUGNED APPELLATE ORDER DATED 24.04.2015 OF LD. CIT(A) IS UNSUSTAINABLE. AT THE TIME OF HEARING BEFORE US, T HE LD. DR SUBMITTED THAT THE ORDER OF ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 18 OF 21 THE LD. CIT(A) SHOULD BE SET ASIDE AND THE LD. CIT( A) SHOULD BE DIRECTED TO PASS A FRESH ORDER. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUBMITTED THAT ALL THE DISPUTED ISSUES SHOULD BE REMANDED TO THE FILE OF T HE AO WITH THE DIRECTION TO PASS ASSESSMENT ORDER AFRESH. IN THIS CONTEXT, WE HAVE NOTED WITH CONCERN THAT THE ASSESSEE HAD FAILED TO AVAIL OF SIX OPPORTUNITIES S PANNING OVER A PERIOD OF EIGHT MONTHS DURING THE ASSESSMENT PROCEEDINGS. THUS, WE ARE OF THE VIEW THAT OPPORTUNITIES PROVIDED BY THE AO DURING ASSESSMENT PROCEEDINGS WE RE REASONABLE, AND DESPITE THAT, THE ASSESSEE HAD FAILED TO AVAIL OF THE OPPORTUNITI ES. WE ARE ALSO MINDFUL THAT STATUTORY PROVISIONS U/S 153(1) OF I.T. ACT PRESCRI BE TIGHT TIME-LINE FOR COMPLETION OF ASSESSMENT PROCEEDINGS AND A STRICT L IMITATION PERIOD. THE AO IS REQUIRED TO COMPLETE THE ASSESSMENT AFTER NECESS ARY INQUIRIES, INVESTIGATIONS AND SCRUTINY, WITHIN THIS STRICT LIM ITATION PERIOD. HAVING REGARD TO CONSTRAINTS OF LIMITATION PERIOD IN COMPLETION O F ASSESSMENT PROCEEDINGS, ONE CANNOT HAVE UNREASONABLE EXPECTATIONS FOR OPPOR TUNITY THAT CAN BE PROVIDED BY THE ASSESSING OFFICER. WHEN THE ASSESS EE FAILED TO AVAIL OF REASONABLE OPPORTUNITIES PROVIDED BY THE AO DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE CANNOT CLAIM AS A MATTER OF RIGHT, TO GO BACK TO THE AO ON THE SETTING ASIDE OF THE ORDER OF THE LD. CIT(A) THEREBY SEEKING TO AVAIL OF MORE OPPORTUNITY FROM THE ASSESSING OFFICE R. WE MAY REFER TO ORDER OF CO-ORDINATE BENCH OF ITAT, DELHI IN THE CASE OF ARA DHANA FOODS & JUICES PVT. LTD. REPORTED AT (2017) 50 CCH 0080 DEL TRIB WHEREIN IT WAS HELD: REVENUE HAS THE AUTHORITY TO MAKE VERIFICATIONS / INQUIRIES / INVES TIGATIONS ETC. IN ACCORDANCE WITH LAW ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 19 OF 21 AND THE ASSESSEE NEEDS TO COMPLY WITH THE LAWFUL RE QUIREMENTS PRESCRIBED IN THAT REGARD BY THE REVENUE AUTHORITIES. .WHEN AN ASSESS EE DOES NOT FULLY HONOUR THE LAWFUL AUTHORITY OF REVENUE, OR WHEN LAWFUL REQUIRE MENTS PRESCRIBED BY REVENUE AUTHORITIES ARE NOT FULLY COMPLIED WITH; THE ASSESS EE CANNOT CLAIM A LENIENT VIEW AS A MATTER OF RIGHT, AND THE ASSESSEE MUST FACE ITS CON SEQUENCES AS PER LAW . IN OUR VIEW, WHEN AN ASSESSEE FAILS TO AVAIL OF REASONABLE OPPOR TUNITIES PROVIDED BY THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDI NGS; THE ASSESSEE MUST PASS THE TEST OF RULE 46A OF I.T RULES, 1962 BEFORE THE CIT(A) ADMITS OR ACCEPTS ADDITIONAL EVIDENCES OR MATERIALS DURING AP PELLATE PROCEEDINGS BEFORE CIT(A). THE CRUCIAL ISSUE IN THE APPEAL BEFORE US IS THE ADMISSIBILITY OF ADDITIONAL EVIDENCES / MATERIALS FILED BY THE ASSESS EE DURING APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A); AND THIS ISSUE CANNOT BE DEC IDED BY ASSESSING OFFICER, AN AUTHORITY BELOW THE CIT(A). WHEN THE ISSUE OF ADMISSIBILITY OF ADDITIONAL EVIDENCES / MATERIALS FILED BY THE ASSESSEE DURING APPELLATE PROCEEDINGS BEFORE LD. CIT(A) IS CRUCIAL; IT WILL BE IMPROPER A ND INAPPROPRIATE TO REMAND THE MATTER TO THE ASSESSING OFFICER. WE HEREBY SET ASIDE THE AFORESAID IMPUGNED APPELLATE ORDER DATED 29.06.2012 OF LD. CIT(A) AND RESTORE ALL DISPUTED MATTERS TO THE FILE OF THE LD. CIT(A), WITH THE DIRECTION TO PASS FRESH ORDER. IF THE LD. CIT(A) DECIDES TO ADMIT ADDITIONAL EVIDENCES, HE SHOULD CL EARLY STATE THE SPECIFIC CLAUSE(S) OF RULE 46A(1) OF I.T. RULES THAT WOULD A PPLY; WHILE RECORDING THE REASONS UNDER RULE 46A(2) OF I.T. RULES. FURTHER, IF THE LD. CIT(A) DECIDES TO ADMIT ADDITIONAL EVIDENCES, REASONABLE OPPORTUNITY PRESCRIBED UNDER RULE ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 20 OF 21 46A(3) OF I.T. RULES MUST BE PROVIDED BY THE LD. CI T(A) TO THE AO. EVEN IF LD. CIT(A) ACCEPTS THE ADDITIONAL EVIDENCES / MATER IALS UNDER RULE 46A(4) OF I.T. RULES, EVEN THEN REASONABLE OPPORTUNITIES MUST BE PROVIDED BY THE LD. CIT(A) TO THE ASSESSING OFFICER TO EXAMINE SUCH ADD ITIONAL EVIDENCES / MATERIALS AND TO PRODUCE ANY EVIDENCE OR DOCUMENT I N REBUTTAL OF ADDITIONAL EVIDENCES / MATERIALS SUBMITTED OR PRODUCED BY THE ASSESSEE BEFORE THE LD. CIT(A). (D.2) BY WAY OF ABUNDANT CAUTION, WE EXPRESSLY CLARIFY TH AT WE HAVE NOT EXPRESSED ANY OPINION ON MERITS OF THE VARIOUS QUANTUM ADDITI ONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER [AND DELETED BY THE LD. CIT (A) IN AFORESAID IMPUGNED APPELLATE ORDER DATED 24.04.2015] WHICH ARE UNDER D ISPUTE IN THE PRESENT APPEAL. SUBMISSIONS AND CONTENTIONS ON MERITS ARE LEFT OPEN FOR BOTH SIDES, REVENUE AS WELL AS ASSESSEE, DURING THE APPELLATE PROCEEDINGS BEFORE T HE LD. COMMISSIONER OF INCOME TAX (APPEALS). (E) IN THE RESULT, APPEAL FILED BY REVENUE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27/09/2019. SD/- SD/- (H.S. SIDHU) (ANADEE NATH MISS HRA) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 27/09/2019 POOJA/- ITA NO.- 4451/DEL/2015. KALRA PAPERS PVT. LTD. PAGE 21 OF 21 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER