Admission of additional evidence before appellate authority without AO's opportunity - remand to assessing officer for fresh assessment.

Admission of additional evidence before the appellate authority was found to breach the evidentiary restraint under Rule 46A because none of the rule's exceptions applied; the appellate officer also failed to give the assessing officer an opportunity to verify, crossexamine or rebut the new documents, contrary to precedent. As a result the appellate deletion of income additions was set aside and the matter remanded to the assessing officer to reframe assessment after allowing the assessee to file evidence and after giving the assessing officer proper opportunity of hearing and verification.

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Issues: Whether the Commissioner of Income Tax (Appeals) was justified in admitting additional evidence not produced before the Assessing Officer and deleting additions made under section 144 of the Income-tax Act without giving the Assessing Officer an opportunity to examine or verify such evidence, in contravention of Rule 46A of the Income-tax Rules, 1962.

Analysis: Rule 46A restricts the appellant from producing evidence before the appellate authority which was not produced before the Assessing Officer, subject to specified exceptions. The appellate authority must give the Assessing Officer an opportunity to consider, verify or rebut additional evidence admitted under these exceptions. The Assessing Officer had framed the assessment under section 144 on the basis that the assessee failed to comply with notices under sections 143(2) and 142(1). The Commissioner (Appeals) admitted fresh documentary evidence and deleted additions without allowing the Assessing Officer to examine or comment on those materials. No exception under Rule 46A that would justify admission without affording opportunity to the Assessing Officer was shown to apply. The admitted evidence materially affected the deletions made by the appellate authority.

Conclusion: The Commissioner of Income Tax (Appeals) erred in admitting and acting upon additional evidence without giving the Assessing Officer an opportunity to verify or rebut it; the appellate order is set aside and the matter is remanded to the Assessing Officer for fresh framing/reframing of assessment after allowing the assessee to file evidence and after affording the Assessing Officer proper opportunity of verification and hearing. This disposes the Revenue's appeal in its favour.

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