Additional evidence under Rule 29 must be decided before merits are heard; appeal disposal without it was unsustainable.

An application for additional evidence under Rule 29 of the ITAT Rules was integral to the appeal and had to be decided before the Tribunal examined the merits. Disposing of the appeal without first ruling on that application was procedurally unsustainable. The proper course was to decide the Rule 29 request on merits and then hear the appeal. The order disposing of the appeal was set aside and the matter remitted to the Tribunal for fresh disposal in accordance with law.

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Issues: Whether the Tribunal was required to first decide the application for adducing additional evidence under Rule 29 of the Income-tax Appellate Tribunal Rules, 1963, before disposing of the appeal on merits, and whether the order disposing of the appeal without doing so was liable to be set aside and the matter remitted.

Analysis: The pending application for additional evidence was integral to the hearing of the appeal and had to be decided before the merits of the appeal were examined. The Tribunal's disposal of the appeal without first deciding that application was therefore procedurally unsustainable. In view of the undertaking to withdraw the reference application, the proper course was to direct the Tribunal to decide the Rule 29 application on merits and then proceed with the appeal.

Conclusion: The order disposing of the appeal was set aside and the matter was remitted to the Tribunal for fresh disposal in accordance with law.

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