Rule 46A compliance is mandatory for additional evidence before the first appellate authority; matter restored for fresh adjudication.

Material first produced before the first appellate authority could be acted upon only after compliance with Rule 46A, including recorded reasons for admission and an opportunity for the Assessing Officer to examine and rebut it. A remand report under section 250(4) was not a substitute for that mandatory procedure. As the evidence had not been tested by the Assessing Officer and the dispute affected the appellate decision at its core, the matter was restored for de novo adjudication after giving both sides due opportunity.

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Issues: Whether the first appellate authority could rely on material produced for the first time before it without compliance with Rule 46A of the Income Tax Rules, 1962, and whether the assessment issues should be restored to the Assessing Officer for fresh consideration.

Analysis: The material placed before the first appellate authority was additional evidence and could be acted upon only after the mandatory procedure under Rule 46A was followed. The requirement to record reasons for admission and to give the Assessing Officer an opportunity to examine the evidence and respond is distinct from a simple remand report under section 250(4) of the Income-tax Act, 1961. Since the evidence had not been examined by the Assessing Officer and the Revenue's grievance went to the core of the appellate decision, the proper course was to restore the matter for fresh adjudication after considering the material and after giving both sides due opportunity.

Conclusion: The matter was remitted to the Assessing Officer for de novo consideration of the material produced before the first appellate authority and for fresh decision on the disputed additions in accordance with law.

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