Additional evidence in tax appeal must be properly admitted and fairly disclosed to the opposing party before reliance can be placed on it.

An appellate tax order cannot stand where it is founded on additional evidence produced for the first time in second appeal without a formal admission order and without giving the Revenue a fair chance to meet that material. The Court treated this procedural defect as going to the root of the decision because the disputed documents materially supported the Tribunal's conclusion. The plea of waiver failed, as the absence of an earlier objection did not cure the prejudice caused by consideration of evidence placed behind the Revenue's back. The impugned orders were liable to be set aside and the matter remitted for fresh decision after both sides were allowed to lead and rebut evidence.

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Issues: Whether the Tribunal's order was vitiated because it relied on additional evidence produced for the first time in second appeal without passing a proper order admitting it and without giving the Revenue an opportunity to meet that evidence, and whether the Revenue had waived objection to such consideration.

Analysis: The order under challenge was found to rest materially on documentary material produced by the assessee at the second appellate stage. The record did not show any order formally admitting that evidence, nor did it show that the Revenue was supplied the application or given a fair opportunity to rebut the material. In tax proceedings, evidence relied upon for deciding the controversy must be dealt with in a manner consistent with fairness and opportunity to the opposite side. The Court also rejected the plea of waiver, holding that the absence of an earlier objection in the memorandum of revision did not cure the prejudice caused by consideration of material placed behind the back of the Revenue. Since the additional evidence formed the foundation of the Tribunal's conclusion, the procedural irregularity went to the root of the decision.

Conclusion: The consideration of additional evidence without affording the Revenue an effective opportunity to meet it was held to be illegal, and the plea of waiver failed. The impugned orders were liable to be set aside and the matters remitted for fresh decision after giving both sides an opportunity to lead and rebut evidence.

Ratio Decidendi: An appellate order founded on additional evidence cannot stand where such evidence is received and relied upon without a proper admission order and without giving the opposite party a fair opportunity to rebut it, and waiver will not be inferred in the face of resulting prejudice.

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