Rule 46A compliance is mandatory before relying on additional evidence at appellate stage; remand follows if procedure is ignored.

Additional evidence cannot be admitted or relied upon at the appellate stage unless the conditions of Rule 46A are satisfied, reasons for admission are recorded, and the Assessing Officer is given a reasonable opportunity to examine and rebut the material. Where the Commissioner (Appeals) accepts fresh material without following this procedure, the action is contrary to law and breaches natural justice. In such a situation, the proper course is remand for fresh adjudication, with the assessment issues examined de novo after hearing the assessee and considering the material already placed before the appellate authority.

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Issues: Whether the Commissioner (Appeals) could admit and rely upon additional evidence without complying with Rule 46A and without giving the Assessing Officer a reasonable opportunity to examine such material, and whether the matter required remand for fresh adjudication.

Analysis: The assessee had not furnished the relevant explanation and supporting documents before the Assessing Officer despite opportunities. The Commissioner (Appeals) accepted material produced for the first time at the appellate stage, but there was no application under Rule 46A, no recording of reasons for admission of the additional evidence, and no opportunity afforded to the Assessing Officer to examine or rebut it. Such admission and reliance on fresh material without following the mandatory procedure under Rule 46A was held to be contrary to law and in breach of natural justice. Since the material had not been examined by the Assessing Officer, the proper course was to restore the matter for fresh consideration.

Conclusion: The Commissioner (Appeals)'s deletion of the additions was set aside and the issues were remanded to the Assessing Officer for de novo adjudication after giving the assessee an opportunity of being heard and after considering the material placed before the Commissioner (Appeals).

Ratio Decidendi: Additional evidence cannot be relied upon at the appellate stage unless the conditions of Rule 46A are satisfied, reasons for admission are recorded, and the Assessing Officer is given a reasonable opportunity to examine and rebut the material.

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