ITO, New Delhi V. Sh. Rajender Kumar Diwan, New Delhi

ITA 4575/DEL/2011

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4111 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 07-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 14-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V P MISHRA
• Keywords: Recovery proceedings; Principle of natural justice; Source of fund; Additional evidence; Procedural lapse; Condonation of delay
• Section: 40A(3); 56; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH.O.P.KANT, ACCOUNTANT MEMBER I.T.A .NO.-4 575/DEL/2011 (ASSESSMENT YEAR-2007-08) ITO, WARD-26(3), ROOM NO.314-D, VIKAS BHAWAN, NEW DELHI. (APPPELLANT) VS RAJENDRA KUMAR DIWAN, 12/2, DIWAN ESTATE, BHAGWATI GARDEN, UTTAM NAGAR, NEW DELHI-110059. PAN-AFTPD9081Q (RESPONDENT) REVENUE BY SH.V.P.MISHRA, SR.DR ASSESSEE BY NONE ORDER PER DIVA SINGH, JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AS SAILING THE CORRECTNESS OF THE ORDER DATED 24.08.2011 OF CIT(A)-XXIV, NEW DELHI PE RTAINING TO 2007-08 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD .CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.70,03,145/- ON ACCOUNT OF CO MPENSATION RECEIVED ON ACCOUNT OF COMPULSORY ACQUISITION OF LAND AS THE CI T(A) HAS MERELY ON THE BASIS OF COPY OF KHASRA GIRDAWAR SUBMITTED BY THE A SSESSEE, HELD THE LAND TO BE AGRICULTURAL AND EXEMPT FROM CAPITAL GAIN. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) ERRED IN ACCEPTING SELF SERVING DOCUMENT NOT CORROBORATED BY CROSS EXA MINATION. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) ERRED IN NOT ALLOWING THE AO TO EXAMINE THE ADDITIONAL EVIDENCE ADMITTED BY HIM AS PER PROVISION U/S 40A(3) OF THE I. T. ACT RULES. 4. SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE M ATTER BACK TO THE AO TO RE-EXAMINE FRESH EVIDENCES IN A HOLISTIC MANNER. THE APPELLANT CRAVES THAT RIGHT TO ADD, DELETE, ALT ER OR AMEND ANY GROUND OF APPEAL. 2. INVITING ATTENTION TO GROUND NO.3 RAISED BY THE R EVENUE, THE LD. SR.DR SUBMITTED THAT THE AO HAS FILED A PETITION DATED 18.03.2015 S TATING THAT IN THE GROUNDS RAISED THERE DATE OF HEARING 07.06.2016 DATE OF PRONOUNCEMENT 10.08.2016 I. T.A .NO.-4575/DEL/2011 PAGE 2 OF 10 IS A TYPOGRAPHICAL ERROR IN MENTIONING U/S 40A(3) AND WHICH MAY BE READ AS UNDER RULE 46A. THE SUBSTITUTION ON CONSIDERING THE MATE RIAL ON RECORD IS PERMITTED. 2.1. THE RECORD SHOWS THAT ON THE LAST DATE OF HEAR ING I.E.12.02.2016 THE APPEAL WAS ADJOURNED ON THE ORAL REQUEST OF THE ASSESSEE AND T HE DATE HAS BEEN NOTED AS PER SIGNATURES ON THE ORDER SHEET. IT IS FURTHER SEEN T HAT ON TWO CONSECUTIVE OCCASIONS PRIOR TO THE ORAL REQUEST THE APPEAL WAS ADJOURNED BOTH O N 04.08.2015 AND 13.11.2015 ON THE WRITTEN REQUEST OF THE ASSESSEE. ACCORDINGLY, AS TH E DATE STOOD NOTED ON BEHALF OF THE ASSESSEE, THE APPEAL ON THE DATE OF HEARING WAS INI TIALLY PASSED OVER. SINCE IN THE SECOND ROUND ALSO THERE WAS NO ADJOURNMENT NOR REPR ESENTATION AND THE ASSESSEE AS PER RECORD HAD ADEQUATE NOTICE HAVING CHOSEN TO REMAIN UNREPRESENTED FOR REASONS BEST KNOWN TO IT THE REVENUE WAS REQUIRED TO ARGUE THEIR APPEAL. 3. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSE SSEE RETURNED AN INCOME OF RS.2,10,274/-. THE SCRUTINY PROCEEDINGS WERE START ED ON THE BASIS OF AIR INFORMATION. THE ASSESSEE WAS SHOW-CAUSED WHY THE AMOUNT OF RS.2 0 LACS SHOULD NOT BE ADDED AS UNDISCLOSED INVESTMENT AND THE ASSESSEE WAS REQUIRE D TO FILE COPIES OF ALL BANK STATEMENTS. THE ASSESSEE AS PER RECORD SOUGHT AN A DJOURNMENT ON 27.11.2009 WHICH WAS GRANTED. HOWEVER, THEREAFTER THE ASSESSEE CHOS E TO REMAIN UNREPRESENTED. IN THESE CIRCUMSTANCES, THE AO PASSED THE ORDER U/S 14 4 ASSESSING THE INCOME AT RS.93,36,920/- BY MAKING AN ADDITION OF RS.91.26 LA CS ODD IN RESPECT OF THE FOLLOWING INVESTMENTS:- (1) INVESTMENT IN UTI MUTUAL FUND RS. 5,00,000/- (2) INVESTMENT IN POST OFFICE RS.15,00,000/- (3) INTEREST ON SENIOR CITIZEN SCHEME FROM POST OFFICE RS. 1,23,503/- (4) COMPENSATION RS.70,03,145/- TOTAL:- RS.91,26,648/- I. T.A .NO.-4575/DEL/2011 PAGE 3 OF 10 4. THE FACTS RELATABLE TO GROUND NO.1 OF THE REVENU ES APPEAL ARE FOUND DISCUSSED IN PARA 4 OF THE ASSESSMENT ORDER AND ARE REPRODUCED H EREUNDER FOR THE SAKE OF COMPLETENESS:- 4. COMPENSATION RECEIVED BY THE ASSESSEE:- IT WAS ALS O OBSERVED THAT THE ASSESSEE THAT THE ASSESSEE HAS RECEIVED COMPENSATIO N OF RS.70,03,145/- ON WHICH TDS OF RS.7,85,753/- WAS DEDUCTED BY ADM/LAC DISTT. WEST, OLD MIDDLE SCHOOL BUILDING, RAMPURA, LAWRENCE ROAD, DEL HI-110035. ASSESSEE HAS CLAIMED CREDIT AND REFUND OF TDS OF RS.7,85,753 /- IN HIS RETURN OF INCOME. HOWEVER, NO DETAILS HAS BEEN FILED BY THE ASSESSEE ABOUT THE NATURE OF RECEIPT OF THE ABOVE SAID AMOUNT AND ITS TAXABIL ITY IN HIS HAND AND WHETHER THE SAME HAS BEEN DECLARED & OFFERED FOR TAXATION B Y HIM IN HIS RETURN OF INCOME. SINCE NO DETAILS ABOUT THE INCOME HAS BEEN FILED ABOUT THE SOURCE OF INCOME AND AMOUNT DECLARED BY THE ASSESSEE IN HI S RETURN FILED. I TREAT THE COMPENSATION RECEIVED OF RS.70,03,145/- WAS NOT DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME AND ADDED TO THE A SSESSEES INCOME. SINCE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS O F HIS INCOME ON THIS GROUND, PENALTY PROCEEDINGS U/S 271(1)(C) OF THE IN COME TAX ACT, 1961 HAS BEEN INITIATED SEPARATELY. (ADDITION RS.70,03,145.00) 5. THE ISSUE TRAVELLED IN APPEAL BEFORE THE CIT(A) WHERE THE ASSESSEE IS FOUND TO HAVE ADVANCED THE FOLLOWING ARGUMENTS:- 4. THE APPELLANT SUBMITTED THAT HE WAS A SENIOR C ITIZEN BORN ON 01.04.1942 AND THAT HE WAS SUFFERING FROM BACK-ACHE AND AGE RE LATED PROBLEMS. IT WAS EXPLAINED THAT HE WAS PRIMARILY AN AGRICULTURIS T WHO DID NOT UNDERSTAND THE INTRICACIES OF INCOME TAX ACT. HE HI MSELF ATTENDED BEFORE THE AO ON 24.11.2009 AND THEREAFTER THE ORDER WAS P ASSED U/S. 144 ON 29.12.2009. HE MADE A REPRESENTATION UNDER RULE 46A OF THE I T RULES, 1962 FOR SUBMISSION OF ADDITIONAL EVIDENCE WHICH WA S CRUCIAL TO DISPOSE OFF JUDICIALLY THE GROUNDS OF APPEAL RAISED BY HIM. THE APPELLANT ALSO REQUESTED FOR A CONDONATION OF DELAY IN FILING THE APPEAL. A REMAND REPORT WAS CALLED FOR FROM THE AO VIDE LETTER DATED 09.03. 2011. THE AO REPLIED VIDE HIS LETTER DATED 14.03.2011, OBJECTING TO THE INTRODUCTION OF ADDITIONAL EVIDENCE, AS SUFFICIENT OPPORTUNITY WAS GIVEN TO THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS IN THE INTEREST O F NATURAL JUSTICE. 5.1. THE FRESH EVIDENCES FILED BY THE ASSESSEE WAS ADMITTED BY THE CIT(A) HOLDING AS UNDER:- 4.1. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, REMAND REPORT OF THE AO AND SUBMISSIONS AND REJOINDER OF THE AUTHORIZED REP RESENTATIVE. THE FIRST AND FOREMOST ISSUE WHICH REQUIRES TO BE DECIDED IS WHETHER ADDITIONAL EVIDENCES SUBMITTED BY THE APPELLANT ARE ADMISSIBLE OR NOT. IT IS SEEN FROM THE DETAILS THAT ADDITIONAL EVIDENCES FILED BEFORE THE UNDERSIGNED HAVE BEEN PRODUCED FOR THE PURPOSE OF DECIDING THIS APPE AL. THESE EVIDENCES I. T.A .NO.-4575/DEL/2011 PAGE 4 OF 10 ENABLE THE UNDERSIGNED TO PASS AN ORDER ON THIS ISS UE, ONE WAY OR THE OTHER. FOR AN APPELLATE AUTHORITY, IT IS IMPLICIT, IN ORDER TO COME TO A PROPER CONCLUSION THAT SUCH CRUCIAL EVIDENCES WHICH HELP I N ARRIVING AT A DECISION, SHOULD BE CONSIDERED. IT IS FOR THIS VERY REASON, T HAT THE RULES REQUIRE NEW EVIDENCES TO BE ADMITTED, MORE SO WHERE THERE IS SU FFICIENT CAUSE FOR THE APPELLANT FOR NOT BEING ABLE TO PRESENT SUCH EVIDEN CE BEFORE THE AO. NEVERTHELESS, IT IS CONSIDERED NOT ONLY FAIR BUT AL SO JUSTIFIED, WHERE THE APPELLATE AUTHORITY ITSELF CONSIDERS SUCH EVIDENCE AS NECESSARY. 4.2. THE HON'BLE COURTS HAVE HELD THAT WHERE THERE IS OM ISSION TO SUBMIT PART OF THE DOCUMENTS AS REQUIRED BY THE AO, THE APPELLA TE AUTHORITY MAY NOT BE JUSTIFIED MERELY BY DRAWING AN ADVERSE INFERENCE AGAINST THE APPELLANT FAILING TO FURNISH CERTAIN DOCUMENTARY EVIDENCES, A S IT WOULD AMOUNT TO A PUNITIVE MEASURE. THE APPELLATE AUTHORITY MAY WELL UNDERTAKE TO MAKE GOOD SUCH OMISSION. HON'BLE DELHI HIGH COURT, IN A RECENT JUDGEMENT IN THE CASE OF CIT VS. VIRGIN SECURITIES AND CREDITS P VT. LTD. (2011) 332 ITR 0396 HAS ALLOWED THE COMMISSIONER OF INCOME TAX (AP PEALS) TO ADMIT ADDITIONAL EVIDENCE AND HELD THAT 'THE ADDITIONAL EVIDENCE WAS CRUCIAL TO THE DISPOSAL OF THE APPEAL AND HAD A DIRE CT BEARING ON THE QUANTUM OF THE CLAIM MADE BY THE ASSESSEE. RULE 46A OF THE INCOME TAX RULES, 1962, PERMITS THE COMMISSIONER (A PPEALS) TO ADMIT ADDITIONAL EVIDENCE IF HE FINDS THAT THE SAME I S CRUCIAL FOR DISPOSAL OF THE APPEAL. 4..3. THEREFORE, ON THE BASIS OF THE ABOVE FACTS AN D CIRCUMSTANCES OF THE CASE AND THE COUNSEL'S CONTENTION FOR ADMISSION OF ADDIT IONAL EVIDENCES, I AM OF THE CONSIDERED OPINION THAT THE DOCUMENTS SUBMITTED BY THE APPELLANT ARE NECESSARY AND ESSENTIAL FOR DECIDING THE APPEAL ON MERITS AND ALSO IN THE INTEREST OF JUSTICE. MOREOVER, IN MY OPINION, THE A PPELLANT HAS SUFFICIENT CAUSE BY WHICH HE WAS PREVENTED TO PRODUCE SUCH EVI DENCES BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ADVANCED AGE OF THE APPELLANT IS ALSO ONE OF THE REASONS WHY, IN MY CONSIDERED OPINION, IT IS ESSENTIAL TO ALLOW ADMISSION OF ADDIT IONAL EVIDENCE AND CONDONATION OF DELAY IN FILING THE APPEAL. 5.2. HAVING ADMITTED THE EVIDENCE THE CIT(A) PROCEE DED TO DELETE THE ADDITION HOLDING AS UNDER:- 4.4. AS REGARDS THE FOURTH GROUND OF APPEAL, THE APPELL ANT RECEIVED AN AMOUNT OF RS.70,03,1457- TOWARDS COMPENSATION ON ACCOUNT O F COMPULSORY ACQUISITION OF HIS LAND. AS REGARDS THE OWNERSHIP O F LAND, THE APPELLANT HAS SUBMITTED A COPY OF THE WILL OF HIS LATE FATHER SH. NAND KUMAR DIWAN WHICH WAS DULY REGISTERED AND WITNESSED, WHO HAD BE QUEATHED THE LAND TO THE APPELLANT. HE HAS ALSO SUBMITTED A COPY OF THE AWARD PASSED BY LAND ACQUISITION COLLECTOR, DISTRICT WEST, DELHI, AS PER WHICH THE COMPENSATION AWARDED TO HIM AMOUNTS TO RS.70,03,145/-. HE HAS AL SO PRESENTED THE COPY OF THE CONSOLIDATED AWARD NO. 20/2005-06 FOR C OMPULSORY ACQUISITION OF LAND IN VILLAGE NAWADA MAJRA, HASTSAL (DWARKA MO RE) FOR MRTS PROJECT. HE HAS ALSO SUBMITTED COPY OF HIS BANK ACCOUNT AS W ELL AS COPY OF KHASRA GIRDAWARI OF THE SAID LAND. ALL THESE DOCUMENTS CON CLUSIVELY PROVE THAT THE AMOUNT OF RS.70,03,1457- WAS RECEIVED BY HIM ON COM PULSORY ACQUISITION I. T.A .NO.-4575/DEL/2011 PAGE 5 OF 10 OF HIS LAND BY THE GOVERNMENT. THEREFORE, THE ADDIT ION OF THIS AMOUNT IN THE INCOME OF THE APPELLANT IS NOT JUSTIFIED AND IS THEREFORE DELETED. 6. THE LD. SR. DR INVITING ATTENTION TO THE ASSESSM ENT ORDER AND THE ARGUMENTS ADVANCED BEFORE THE CIT(A) SUBMITTED THAT THE CIT(A ) AFTER COMING TO THE CONCLUSION THAT FRESH EVIDENCE WAS REQUIRED TO BE ADMITTED FAI LED TO CONFRONT THEM FOR REBUTTAL TO THE AO. THE SAID EXERCISE IT WAS SUBMITTED HAS NOT BEEN DONE. ACCORDINGLY IT WAS HIS PRAYER THAT THE ISSUE MAY BE RESTORED TO THE AO FOR CONSIDERING AND VERIFYING THE EVIDENCES TAKEN INTO CONSIDERATION BY THE CIT(A). 7. WE HAVE HEARD THE SUBMISSIONS ADVANCED ON BEHALF OF THE REVENUE AND HAVE NOTED THAT DESPITE ADEQUATE NOTICE OF THE DATE OF H EARING THE ASSESSEE HAS CHOSEN TO REMAIN UNREPRESENTED. CONSIDERING THE FACTS AS SET OUT HEREIN ABOVE, WE FIND THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, THE C IT(A) HAS ERRED IN DELETING THE ADDITION MADE WITHOUT FIRST CONFRONTING THE EVIDENC ES TAKEN ON RECORD TO THE AO. NO DOUBT THE FRESH EVIDENCES WERE REMANDED TO THE AO W HO OBJECTED TO ITS ADMISSIBILITY. THE OBJECTION WAS OVER-RULED BY THE CIT(A) HOLDING THAT THE EVIDENCES WERE RELEVANT AND CRUCIAL FOR DETERMINING THE ISSUES AND ACCEPTING TH E ARGUMENTS THAT THE ASSESSEE WAS A SENIOR CITIZEN AS SUCH MAY NOT HAVE BEEN ALERT IN PLACING THE EVIDENCES ON RECORD BEING PRIMARILY AN AGRICULTURIST SUFFERING FROM BACKACHE AND AGE-RELATED PROBLEMS. THE SAID CONCLUSION ON FACTS MAY HAVE BEEN JUSTIFIED. HOWEV ER, HAVING SO CONCLUDED IT WAS INCUMBENT UPON THE CIT(A) UNDER SUB-RULE (3) OF RUL E 46A TO CONFRONT THE EVIDENCES TO THE AO SO AS TO ALLOW HIM AN OPPORTUNITY TO REBUT T HE EVIDENCES PLACED ON RECORD IN THE ABSENCE OF ANY SUCH EXERCISES THE ORDER IS IN VIOLA TION OF THE STATUTORY RULES AND OPEN TO THE CHALLENGE OF BEING PERVERSE. ACCORDINGLY, WE S ET ASIDE THE IMPUGNED ORDER AND RESTORE THE ISSUES BACK TO THE CIT(A). SUPPORT IS D RAWN FROM THE DECISION OF THE I. T.A .NO.-4575/DEL/2011 PAGE 6 OF 10 JURISDICTIONAL HIGH COURT DATED 15.11.2011 IN ITA N O.928/2011 IN THE CASE OF CIT VS MANISH BUILDWELL PVT. LTD. [2012] 204 TAXMAN 106 ( DELHI). 7.1. A PERUSAL OF THE SAID DECISION SHOWS THAT CON SIDERING THE NON-FULFILLMENT OF THE REQUIREMENTS SET OUT IN SUB-RULE (3) OF RULE 46A T HE HONBLE COURT WAS PLEASED TO RESTORE THE ISSUE BACK TO THE CIT(A DIRECTING THE S AID AUTHORITY TO ADDRESS THE SHORTCOMINGS. HOLDING THAT IT IS TRUE THAT THE POW ERS OF CIT(A) AS FIRST APPELLATE AUTHORITY ARE CO-TERMINOUS POWER OVER THE SOURCES O F INCOME CONSTITUTING THE SUBJECT MATTER OF THE ASSESSMENT, EXCEPT THE POWER TO TACKL E NEW SOURCES OF INCOME NOT CONSIDERED BY THE ASSESSING OFFICER, AND THAT THE C IT(A) CAN ALSO 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 COMMISSIONER OF INCOME-TAX, U.P. V. KANPUR COAL SYN DICATE, (1964) 53 ITR 225. HOWEVER, IN THE FACTS BEFORE THE HONBLE COURT, THE CIT (A) DID NOT EXERCISE THIS RIGHT. THIS POWER, THE COURT OBSERVED IS RECOG NIZED IN SUB-SECTION (4) OF SECTION 250 AND HAS TO BE EXERCISED BY THE CIT (A) AND FOR THIS THERE SHOULD BE MATERIAL ON RECORD TO SHOW THAT HE, WHILE DISPOSING OF THE APPEAL, HAD DI RECTED FURTHER ENQUIRY AND CALLED FOR THE CONFIRMATION LETTERS FROM THE ASSESSEE EVEN IN RESPECT OF RECEIPT OF MONIES FROM CUSTOMERS BY WAY OF CHEQUES. RULE 46A, IT WAS OBSE RVED HELD THAT IS A PROVISION IN THE INCOME TAX RULES, 1962 WHICH IS INVOKED, ON THE OTHE R HAND, BY THE ASSESSEE WHO IS IN AN APPEAL BEFORE THE CIT (A). ONCE THE ASSESSEE INV OKES RULE 46A AND PRAYS FOR ADMISSION OF ADDITIONAL EVIDENCE BEFORE THE CIT (A) , THEN THE PROCEDURE PRESCRIBED IN THE SAID RULE IT HAS BEEN HELD HAS TO BE SCRUPULOUS LY 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 DISPOSING OF THE APPEAL THE HONBLE COURT HEL D CANNOT BE RELIED UPON TO CONTEND THAT THE PROCEDURAL REQUIREMENTS OF RULE 46A NEED N OT BE COMPLIED WITH. THEIR LORDSHIPS HAVE HELD THAT IF SUCH A PLEA OF THE ASSESSEE IS AC CEPTED THEN IT WOULD REDUCE RULE 46A I. T.A .NO.-4575/DEL/2011 PAGE 7 OF 10 TO A DEAD LETTER BECAUSE IT WOULD THEN BE OPEN TO E VERY 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 VIRT UE OF HIS POWERS OF ENQUIRY UNDER SUB-SECTION (4) OF SECTION 250. THE COURT HELD THAT THIS WOULD MEAN IN TURN THAT: (A) THE REQUIREMENT OF RECORDING REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE; (B) THE REQUIREMENT OF EXAMINING WHETHER THE CONDITIONS FOR ADMITTING THE ADDITIONAL EVIDENCE ARE SATISFIED; AND (C) THE REQUIREMENT THAT THE ASSESSING OFFICER SHOULD BE ALLOWED A REASONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE ET C. CAN ALL BE THROWN TO THE WINDS, A POSITION WHICH THE HONBLE COURT HELD WAS WHOLLY UNACCEPTABLE AND MAY RESULT IN UNACCEPTABLE AND UNJUST CONSEQUENCES. THE HONBLE COURT HELD THAT THE PROCEDURAL REQUIREMENTS MENTIONED IN THE RULE MUST BE STRICTLY COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXERCISED AND NOT EXERCISED IN A ROUTI NE OR CURSORY MANNER. THE TRIBUNAL IN VIEW THEREOF WAS FAULTED WITH FOR OVER-LOOKING T HE REQUIREMENTS OF SUB-RULE (3) OF RULE 46A AND CONFUSING IT WITH SUB-RULE (4) OF RULE 46A. ADDRESSING THE RATIONALE FOR THE RULE THE HONBLE COURT OBSERVED THAT THE FUNDAM ENTAL RULE WHICH IS VALID IN 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, FAIR AND DETAILED ENQUIRY AND VERIFICATION. REFERRING TO THE DECISION IN KESHAV MILLS CO. LTD. V. COMMISSIONER OF INCOME-TAX, BOMBAY NORTH, AHMEDABAD (1965) 56 ITR SC 365 , 7-JUDGE BENCH JUDGEMENT OF THE SUPREME COURT, IT WAS OBSERVED THAT THE COURT HELD THAT 'PROCEEDINGS TAKEN FOR THE RECOVERY OF TAX UNDER TH E PROVISIONS OF THE ACT ARE NATURALLY INTENDED TO BE OVER WITHOUT UNNECESSARY D ELAY, AND SO, IT IS THE DUTY OF THE PARTIES, BOTH THE DEPARTMENT AND THE ASSESSEE, TO L EAD ALL THEIR EVIDENCE AT THE STAGE WHEN THE MATTER IS IN CHARGE OF THE INCOME-TAX OFFI CER.' IT WAS HELD BY THE JURISDICTIONAL HIGH COURT THAT IT IS FOR THE SAID REASON THAT RULE 46A STARTS IN A NEGATIVE I. T.A .NO.-4575/DEL/2011 PAGE 8 OF 10 MANNER BY SAYING THAT AN APPELLANT BEFORE THE CIT ( A) SHALL NOT BE ENTITLED TO PRODUCE BEFORE HIM ANY EVIDENCE, WHETHER ORAL OR DOCUMENTAR Y, OTHER THAN THE EVIDENCE PLACED BY HIM BEFORE THE ASSESSING OFFICER. THEIR LORDSHIP S HELD THAT AFTER MAKING THE SAID GENERAL STATEMENT, WHICH WAS FOUND TO BE IN CONSONA NCE WITH THE PRINCIPLE STATED IN THE AFORESAID JUDGMENT OF THE APEX COURT, EXCEPTIONS HA VE BEEN CARVED OUT SETTING OUT UNDER WHAT CIRCUMSTANCES IT WOULD BE OPEN TO THE CI T (A) TO ADMIT ADDITIONAL EVIDENCE. THE ADDITIONAL EVIDENCE CAN ONLY THEN BE PRODUCED A T THE FIRST APPELLATE STAGE WHEN CONDITIONS STIPULATE IN THE RULE 46A ARE SATISFIED AND A FINDING IS RECORDED TO THAT EXTENT WHICH MAKES IT CLEAR IN UNAMBIGUOUS LANGUAGE THAT F IRSTLY THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFORE ADDITIONAL E VIDENCE CAN BE ADMITTED AND THEREAFTER EVERY PROCEDURAL REQUIREMENT MENTIONED I N THE RULE HAS TO BE STRICTLY COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXER CISED AND NOT EXERCISED IN A ROUTINE OR CURSORY MANNER. THEIR LORDSHIPS HAVE HELD THAT A DISTINCTION SHOULD BE RECOGNIZED AND MAINTAINED BETWEEN A CASE WHERE THE ASSESSEE IN VOKES RULE 46A TO ADDUCE ADDITIONAL EVIDENCE BEFORE THE CIT (A) AND A CASE W HERE THE CIT (A), WITHOUT BEING PROMPTED BY THE ASSESSEE, WHILE DEALING WITH THE AP PEAL, CONSIDERS IT FIT TO CAUSE OR MAKE A FURTHER ENQUIRY BY VIRTUE OF THE POWERS VEST ED IN HIM UNDER SUB-SECTION (4) OF SECTION 250. IT IS ONLY WHEN THE CIT(A) EXERCISES HI S STATUTORY POWER SUO MOTO 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 INVOKES RULE 46A, IT IS INCUMBENT UPON THE CIT (A) TO COMPLY WITH THE REQUI REMENTS OF THE RULE STRICTLY. 7.2. IN THE FACTS OF THE CASE BEFORE THE HONBLE HI GH COURT IT WAS FOUND THAT THE CIT (A) HAD OBSERVED THAT THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED BECAUSE THE ASSESSEE WAS PREVENTED BY ADDUCING THEM BEFORE THE ASSESSING OFF ICER. THE SAID OBSERVATION IT WAS HELD TAKES CARE OF CLAUSE (C) OF SUB-RULE (1) OF RU LE 46A. THE OBSERVATION OF THE CIT (A) I. T.A .NO.-4575/DEL/2011 PAGE 9 OF 10 ALSO TAKES CARE OF SUB-RULE (2) UNDER WHICH HE IS R EQUIRED TO RECORD HIS REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE. THUS, THE REQUIR EMENT OF SUB-RULES (1) AND (2) OF RULE 46A HAVE BEEN COMPLIED WITH. HOWEVER, THE HONBLE 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 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) THE COURT FOUND TO SHOW THAT T HE ASSESSING OFFICER WAS CONFRONTED WITH THE CONFIRMATION LETTERS RECEIVED BY THE ASSES SEE FROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND ASKED FOR COMMENTS. THUS, TH E END RESULT THE HONBLE COURT HELD HAS BEEN THAT ADDITIONAL EVIDENCE WAS ADMITTED AND ACCEPTED AS GENUINE WITHOUT THE ASSESSING OFFICER FURNISHING HIS COMMENTS AND W ITHOUT VERIFICATION. IN THESE CIRCUMSTANCES THE COURT HELD SINCE THIS IS AN INDI SPENSABLE REQUIREMENT, WE ARE OF THE VIEW THAT THE TRIBUNAL OUGHT TO HAVE RESTORED THE M ATTER 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 THAT IT PROC EEDED TO MIX 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 THEIR LORDSHIPS FURTHER HELD THAT THE TRIBUNAL ERRED IN ITS INTERPRETATION OF THE PROVISI ONS OF RULE 46A VIS--VIS SECTION 250(4). ITS VIEW THAT SINCE IN ANY CASE THE CIT (A), BY VIRT UE 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 VIOLATION OF RULE 46A IS ERRONEOUS. THE TRIBUNAL APPEARS TO HAVE NOT APPRECIATED THE DISTINCTION BET WEEN 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 A DDITIONAL EVIDENCE SOUGHT TO BE INTRODUCED BY THEM BEFORE THE CIT (A) CANNOT BE SUB JECTED TO THE CONDITIONS PRESCRIBED I. T.A .NO.-4575/DEL/2011 PAGE 10 OF 10 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 COUNTENANCED. 7.3. WE FIND THAT IN THE FACTS OF THE PRESENT CASE ALSO AS HAVE BEEN ADDRESSED AT LENGTH IN THE EARLIER PART OF THIS ORDER THE PROCEDURAL LA PSE IS PATENT AND EVIDENT ON THE FACE OF THE RECORD ITSELF ALLOWING THE DEPARTMENTAL GROUND, THE ISSUE IS RESTORED BACK TO THE FILE OF THE CIT(A) TO ADDRESS THE PROCEDURAL LAPSES AND PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPP ORTUNITY OF BEING HEARD. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOW ED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 10 TH OF AUGUST, 2016. SD/- SD/- (O.P.KANT) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT AS SISTANT REGISTRAR ITAT NEW DELHI