RULG_189 - Taxpublishers.in

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers Rule 46A Production of Additional Evidence 1. Power of first appellate authority to admit additional evidence Section 250(4) confers jurisdiction on the first appellate authority to make such inquiry as he deems fit. The Joint Commissioner (Appeals) or the Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the assessing officer to make further inquiry and report the result of the same to the Joint Commissioner (Appeals) or the Commissioner (Appeals). Where fresh evidence is available and the assessee is in a position to produce the same, there is no reason why the first appellate authority should not examine it on merits and pass appropriate orders. Unless the first appellate authority is satisfied that the request for permission to produce the additional evidence lacks bona fides and is made with a view to causing delay in the proceedings, he would not be justified in rejecting the request. His discretion is either to conduct the enquiry himself in the manner he thinks fit or to direct the assessing officer to do so. That a wide discretion is conferred upon the first appellate authority is clear from the fact that, unlike in the case of the Tribunal, section 250 clearly provides for a further enquiry.--Vide K. Mohammed v. ITO (1977) 107 ITR 808 (Ker). Where the assessee wanted to prove genuineness of loan transaction by relying on the fact that the amount was borrowed and repaid by cheques, the first appellate authority should have admitted the additional evidence produced by assessee regarding genuineness of loan. In the facts and circumstances of this case, even under rule 46A of the rules the assessee should have been allowed to produce the additional evidence. The first appellate authority was not correct in holding that the case of the assessee did not fall in any of the four exceptions set out in sub-rule (1) of rule 46A. In fact, the present case would fall under clause (c) of sub-rule (1) of rule 46A because the assessee had no occasion to collect this evidence earlier. He could have reasonably expected that the creditors will appear before the assessing officer in compliance with the summons issued by him. He was never informed by the assessing officer that the creditors were not available or unidentifiable. If he had been informed by the Income Tax officer in the course of assessment proceedings that he was not inclined to accept the loans as genuine because of the non-availability of the creditors, he could have tried to satisfy him about the genuineness of the loan by producing other evidence. At the time of hearing of the appeal, the appellant tried to satisfy the first appellate authority about the genuineness of one of the loans by producing material which he could collect in the meantime. This case, therefore, will fall under clause (c) of sub-rule (1) of rule 46A of the rules. In any view of the matter, the Appellate Assistant Commissioner should have considered the evidence produced by the assessee in regard to the loan from creditors.--Vide Prabhavati S. Shah, Smt. v. CIT (1998) 231 ITR 1 (Bom)relying on B.L. Choudhary v. CIT (1976) 105 ITR 371 (Ori). SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Rule 46A

Production of Additional Evidence

1. Power of first appellate authority to admit additional evidence

Section 250(4) confers jurisdiction on the first appellate authority to make such inquiry as he deems fit. The Joint Commissioner (Appeals) or the Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the assessing officer to make further inquiry and report the result of the same to the Joint Commissioner (Appeals) or the Commissioner (Appeals).

Where fresh evidence is available and the assessee is in a position to produce the same, there is no reason why the first appellate authority should not examine it on merits and pass appropriate orders. Unless the first appellate authority is satisfied that the request for permission to produce the additional evidence lacks bona fides and is made with a view to causing delay in the proceedings, he would not be justified in rejecting the request. His discretion is either to conduct the enquiry himself in the manner he thinks fit or to direct the assessing officer to do so. That a wide discretion is conferred upon the first appellate authority is clear from the fact that, unlike in the case of the Tribunal, section 250 clearly provides for a further enquiry.--Vide K. Mohammed v. ITO (1977) 107 ITR 808 (Ker).

Where the assessee wanted to prove genuineness of loan transaction by relying on the fact that the amount was borrowed and repaid by cheques, the first appellate authority should have admitted the additional evidence produced by assessee regarding genuineness of loan.

In the facts and circumstances of this case, even under rule 46A of the rules the assessee should have been allowed to produce the additional evidence. The first appellate authority was not correct in holding that the case of the assessee did not fall in any of the four exceptions set out in sub-rule (1) of rule 46A. In fact, the present case would fall under clause (c) of sub-rule (1) of rule 46A because the assessee had no occasion to collect this evidence earlier. He could have reasonably expected that the creditors will appear before the assessing officer in compliance with the summons issued by him. He was never informed by the assessing officer that the creditors were not available or unidentifiable. If he had been informed by the Income Tax officer in the course of assessment proceedings that he was not inclined to accept the loans as genuine because of the non-availability of the creditors, he could have tried to satisfy him about the genuineness of the loan by producing other evidence. At the time of hearing of the appeal, the appellant tried to satisfy the first appellate authority about the genuineness of one of the loans by producing material which he could collect in the meantime. This case, therefore, will fall under clause (c) of sub-rule (1) of rule 46A of the rules. In any view of the matter, the Appellate Assistant Commissioner should have considered the evidence produced by the assessee in regard to the loan from creditors.--Vide Prabhavati S. Shah, Smt. v. CIT (1998) 231 ITR 1 (Bom)relying on B.L. Choudhary v. CIT (1976) 105 ITR 371 (Ori).