Rule 46A compliance required before relying on additional evidence; section 54 relief based on untested material could not stand.

The appellate authority could not admit and rely on additional evidence without first confronting it to the Assessing Officer and giving an opportunity to examine or rebut it under Rule 46A(3). A sale deed was accepted as additional evidence and used to grant exemption under section 54, but the material was not shown to have been placed before the Assessing Officer. Because the mandatory procedural safeguard was not followed, the relief based on that evidence could not be sustained and the matter required fresh adjudication after both sides were heard.

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Issues: Whether the Commissioner (Appeals) could admit and rely upon additional evidence without confronting it to the Assessing Officer under Rule 46A, and whether the resultant relief under section 54 could stand.

Analysis: The appellate authority accepted a sale deed as additional evidence and granted exemption under section 54, but the material was not shown to have been placed before the Assessing Officer. Rule 46A(3) required the evidence to be confronted to the Assessing Officer and an opportunity had to be given to examine or rebut it. As this procedural safeguard was not followed, the relief granted on the basis of such evidence could not be sustained.

Conclusion: The admission and reliance on additional evidence without compliance with Rule 46A(3) was impermissible, and the matter was required to be remitted for fresh adjudication after giving both sides an opportunity.

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