Additional evidence in tax appeals cannot justify deletion unless the Assessing Officer can test and rebut the material.

Appellate relief based on alleged third-party replies produced for the first time at the appellate stage cannot stand unless the material is proved and the Assessing Officer is given a reasonable opportunity to examine and rebut it. Where notices and summons remained unserved or unanswered, and the appellate authority relied on unproved documents without complying with the rules governing additional evidence, the resulting findings were perverse. The Calcutta High Court held that the deletion of the reassessment additions could not be sustained on such material, and the Tribunal's affirmation of that deletion also failed. The Revenue's challenge succeeded because the appellate finding invalidating reopening rested on evidence that had not been properly established or tested.

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Issues: Whether the appellate authorities were justified in deleting the reassessment additions on the basis of alleged third-party replies produced for the first time at the appellate stage without giving the Assessing Officer an opportunity to examine them, and whether the finding invalidating reopening could stand on such material.

Analysis: The notices issued under the income-tax law and the summons to third parties were found by the Assessing Officer to have remained unresponded or unserved. The assessee relied before the appellate authority on documents said to have been furnished by those third parties, but those documents were not shown to have been proved either as to their existence or contents. The appellate authority could not reverse the assessment on the basis of such unproved material without complying with the requirements governing additional evidence and without affording the Assessing Officer a reasonable opportunity to test the material. Reliance on those documents at the appellate stage, in the absence of proof and in violation of the rule regulating additional evidence, rendered the appellate findings perverse.

Conclusion: The deletion made by the appellate authority and affirmed by the Tribunal could not be sustained; the challenge by the Revenue succeeded.

Ratio Decidendi: Appellate relief based on unproved additional evidence cannot be sustained unless the Assessing Officer is given a reasonable opportunity to examine and rebut that material, and findings founded on such material are liable to be set aside as perverse.

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