Assessee can submit new evidence to Appellate Assistant Commissioner under Income-tax Act

The High Court of Kerala held that an assessee can present new evidence before the Appellate Assistant Commissioner under the Income-tax Act. The Appellate Assistant Commissioner has the discretion to allow further inquiry and consider additional evidence unless bad faith is suspected. The judgment emphasized the narrower discretion of the Appellate Assistant Commissioner compared to the Income-tax Appellate Tribunal. In this case, the refusal to allow additional evidence was deemed incorrect, and the Commissioner was directed to conduct a further inquiry based on the new evidence or instruct the assessing authority to do so. The original petition was allowed without costs.

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Issues: Whether an assessee under the Income-tax Act is entitled to produce fresh evidence before the Appellate Assistant Commissioner.

Summary:
The judgment by T. Kochu Thommen J. of the High Court of Kerala addresses the issue of whether an assessee can present new evidence before the Appellate Assistant Commissioner under the Income-tax Act. In this case, the assessee had shown two cash credits in their returns for the assessment year 1969-70, but was unable to provide evidence to support their claims. The Appellate Assistant Commissioner had denied permission to produce documents and examine witnesses regarding the cash credits, a decision that was upheld by the Commissioner.

Section 250(4) of the Income-tax Act, 1961, allows the Appellate Assistant Commissioner to conduct further inquiries before disposing of an appeal. The judgment emphasizes that the Appellate Assistant Commissioner has the discretion to allow a further inquiry, including the production of additional evidence, to ascertain the true state of affairs. Unless there are valid reasons to believe that the request for new evidence is made in bad faith to cause delays, the Appellate Assistant Commissioner should consider the additional evidence on its merits.

The judgment highlights that the discretion of the Appellate Assistant Commissioner is narrower compared to the Income-tax Appellate Tribunal, as the former is specifically provided the authority to conduct a further inquiry. In this case, the documents that the assessee sought to present had been accepted in penalty proceedings by the Appellate Assistant Commissioner previously. Therefore, the judgment declares that the refusal to allow the production of additional evidence before the Appellate Assistant Commissioner was incorrect, and directs the Commissioner to conduct a further inquiry based on the new evidence or instruct the assessing authority to do so.

Ultimately, the original petition is allowed, and no costs are imposed in this matter.

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