Rule 46A and co-terminus appellate powers justified relief where the assessee's material was already on record.

Where the assessee's books and supporting material were already part of the assessment record, the Commissioner (Appeals) could examine them and also rely on documents considered in remand proceedings. The Assessing Officer was given opportunity to respond but did not furnish the remand report despite notices and reminders, so the material could not be treated as impermissible fresh evidence. On those facts, there was no breach of Rule 46A, and the disallowance under section 40(a)(ia) for alleged non-deduction of tax at source was rightly restricted. The Revenue's challenge failed.

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Issues: Whether the Commissioner (Appeals) erred in considering the assessee's material and deleting the disallowance under section 40(a)(ia) on account of alleged non-deduction of tax at source, and whether there was any violation of Rule 46A in admitting additional evidence.

Analysis: The assessee had produced its books of account and related material before the Assessing Officer, who examined the record and made the disallowance under section 40(a)(ia) for alleged failure to deduct tax under section 194A. In appellate proceedings, the Commissioner (Appeals) called for a remand report, and the Assessing Officer had opportunity to deal with the material but did not furnish the report despite notices and reminders. The appellate authority, having co-terminus powers with the Assessing Officer, was entitled to examine the material already on record and the documents produced in remand proceedings. On these facts, the evidence could not be treated as impermissible fresh material admitted in breach of Rule 46A.

Conclusion: The disallowance was rightly restricted on the evidence available, and there was no violation of Rule 46A; the Revenue's challenge failed.

Final Conclusion: The appellate order deleting the major part of the addition was sustained and the Revenue's appeal stood rejected.

Ratio Decidendi: Where the assessee's material is already part of the assessment record and the Assessing Officer is given an opportunity in remand proceedings, the Commissioner (Appeals) may rely on such material and is not barred by Rule 46A from granting relief.

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