TaxTMI 
TaxTMI 
2000 (3) TMI 179
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....ade the addition of Rs.2,66,682 being the amount payable on account of cess to the Government of Assam through M/s. Assam Tea Corporation on account of purchase of green leaves from Bholaguri T.E. The Assessing Officer had stated that the assessee did not pay the amount till the filing of the return of income and as such it hit the provisions of section 43B of the Act. It was also stated by the Assessing Officer that the assessee also could not be able to produce any evidence to show that the amount of assessee had been paid. The assessee filed appeal before the first appellate authority against the aforesaid disallowance. 4. During the course of hearing of the appeal before the first appellate authority the assessee filed a copy of the agreement entered upon with the M/s. Assam Tea Corporation Ltd. for green leaves purchase and also a copy of the letter from M/s. Assam Tea Corporation Ltd. for payment of additional bill in respect of cess and submitted that the cess levied was payable by the seller. The assessee argued before the first appellate authority that invoking of the provisions of section 43B of the Act on the purchaser was unjustified and against the principle of law.....
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....submitted that the CIT(A) arrived at a conclusion and deleted the amount on the basis of new evidences without giving opportunity to the Assessing Officer in violation of rule 46A of the Income-tax Rules, 1962. On the other hand, the learned authorised representative of the assessee, Shri A. Bhattacharjee, supported the order of the CIT(A) and submitted that the assessee did not furnish copies of the documents before the Assessing Officer, as the same were not asked for by him. 8. We have considered the submissions of the learned representatives and the orders of the authorities below. On perusal of the order of the CIT(A) we agree with the learned Departmental Representative that the CIT(A) has deleted the addition of Rs.2,66,682 on being satisfied that the liability to pay cess to the State Government was the liability of the seller as per the agreement entered into between the assessee and M/s. Assam Tea Corporation Ltd. and the clarification given by M/s. Assam Tea Corporation Ltd. by its letter dated 6-11-1992 admittedly the copies of the aforesaid papers were not the two produced by the assessee to the Assessing Officer. Similarly we also observe from the order of the CIT(....
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....sp; to 26-5-1990 43,593 29-6-1990 ---------------------------------------------------------------------------- 13. The assessee submitted before the CIT(A) that the two payments were made either within one month or within one month and additional 15 days when paid by cheques. The assessee contended before the first appellate authority that all payments were made by the assessee's Apex Bank through cheque to the S.B.L, Guwahati and as such these two additions are outside the provisions of section 43B of the Act. The CIT(A) agreed with the contention of the assessee and held that the aforesaid two payments of Rs.31,886 and Rs.43,593 are not hit by section 43B of the Act and allowed the same. Hence the Department is in appeal before the Tribunal. 14. At the time of hearing of the appeal the Departmental Representative, Shri S.K Malakar, submitted that as per the Employees Provident Fund Scheme, 1952, the amount is to be paid within 15 days of the close of ever....
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....Judicial Member and I am not persuaded to accept his findings. 2. The facts of the case have been set out by the learned Judicial Member in great detail and they need not be stated here. 3. The Department is in appeal having raised the first two grounds with respect to the violation of Rule 46A by the ld. CIT(A). The grounds have been framed with also keeping in view the additions framed by the Assessing Officer having been deleted by the ld. CIT(A) by accepting evidence other than those were before the Assessing Officer. These have been considered by my learned Judicial Member appropriate and has sought to restore them to the file of the CIT(A) with the direction to redecide the issue afresh after giving opportunity to the Assessing Officer. 4. In my view the evidence that have been relied upon by the CIT(A) were before the Assessing Officer as well as in much on both the grounds the Department is in appeal before us, the Assessing Officer has himself accepted certain basis which according to him were not satisfactory and hence disallowance were framed. (a) In the case of cess payable to the Government on the basis of procurement of green leaves through Assam Tea Corpo....
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....ng Officer. The ground raised by the Department, therefore, is untenable move so by the fact that CIT(A) is authority above the Assessing Officer to understand the technicalities of framing assessment and is properly adjudicating thereupon. Therefore, this ground should be aptly dismissed instead of restoring it to the very authority who accepted the version of the Assessing Officer in an authoritative manner instead of invoking provision not applicable in the instant case. (b) In the case of deleting the addition of Rs.60,000 framed by the Assessing Officer on account of having found that nominal interest was charged from the directions (i.e. 6 per cent) vis-a-vis paying interest @ 21 per cent to financial institutions, the learned Assessing Officer added difference in the rate of interest changed and paid. The Department has raised the ground of having accepted the Board Resolution for allowing the contention of the assessee respondent in violation of Rule 46A by the CIT(A). In my view the Assessing Officer allowed interest @ 6 per cent and sought to add the difference of 15 per cent on amount of undercharge of interest. The acceptance of 6 per cent interest is the acceptance ....
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....refore, the Accountant Member has rejected the ground Nos. 1 and 2 of the appeal. 2. In view thereof, there is a difference of opinion and the issue is referred to the Hon'ble President of the Income-tax Appellate Tribunal under section 255(4) of the Act for opinion of the Third Member on this issue. The issue framed is as under:-- "Whether in the facts and circumstances of the case the Judicial Member is right to hold that the first appellate authority admitted fresh evidence in violation of rule 46A of the Income-tax Rules, 1962, or the Accountant member is right to hold that no violation of rule 46A has been made by the first appellate authority in deleting the disallowances made by the Assessing Officer?" ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 THIRD MEMBER ORDER 1. In this case because of the difference between the two Members the Hon'ble President, Income-tax Appellate Tribunal, was requested to appoint the Third Member for deciding the differences. The Hon'ble President was pleased to appoint me as the Third Member and, therefore, the matter was heard by me. The question referred to me is as under:-- "Whether in the facts and circumstances of....
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....vidence was earlier unregulated, it has now to be borne in mind that the assessee had been allowed to produce additional evidence only in the circumstances specified in rule 46A of the Income-tax Rules, 1962, which regulates the discretion to be exercised by the first appellate authority. This rule 46A was inserted by the Income-tax Second Amendment Rules, 1973, with effect from 1-4-1973. The rule 46A as is relevant for our purpose reads as under:-- "46A(1) The appellant shall not be entitled to produce before the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer except in the following circumstances, namely:-- (a) where the Assessing Officer has refused to admit evidence which ought to have been admitted; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer, or (c) where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any g....
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....e and M/s. Assam Tea Corporation Ltd. Clause 2 of the agreement which is relevant for the controversy, states the rate at which the assessee is to purchase green tea leaves from M/s. Assam Tea Corporation Ltd. Clause 2 of the agreement reads as under:-- "2. That the first party agreed to purchase approximately 5,00,000 kgs. of Green Leaves of standard quality annually from the said Tea Estate belonging to Assam Tea Corporation Ltd., for a period of one year from the beginning of the plucking season of the year 1990 at the rate of Rs.5.11 (Rupees five and paise eleven) only per kg. plus any amount charged for green tea leaves under the Assam Taxation (Specified Lands) Ordinance, 1989, Ex-Bholaguri Tea Estate." In this clause the first party is the assessee. The assessee purchased certain quantity of green leaves for which an amount was debited in the purchase and expenses account at the rate of Rs. 5.11 per kg. plus Rs. 0.50 in respect of the cess imposed by the Government of Assam as per Assam Taxation (specified lands) Rule, 1990. At the end of the year, out of this purchase certain amount of cess remained payable to M/s. Assam Tea Corporation Ltd. The Assessing Officer ment....
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....f Rs.3,53,050.00 (i.e. 7,06,100 Kg. G.L. @ 0.50 paise per kg.) immediately, on account of Green-leaf supplied to you from our Bholaguri T.E. in 1990." Considering this, the CIT(A) passed the following order:-- "After going through the facts of the case regarding liability on account of cess and the clarification made by Assam Tea Corporation Ltd. in its letter dated 6-11-1992, it is clear that Assam Tea Corporation Ltd. is liable for payment of the cess which was imposed by the State Government after the agreement was signed. Cess is the liability of Assam Tea Corporation Ltd. which they have paid to the State Government, therefore, the question of paying the cess by the appellant does not arise and provisions of section 43B is not applicable in the case of the appellant." 6. In respect of the addition of Rs.60,000 it was explained by the assessee that the Board of Directors of the Company vide resolution dated 10-5-1990 had approved the temporary loan of Rs.1,00,000 each to four fulltime Directors of the company at the rate of 6% interest per annum and this loan was granted to the Directors to enable the construction of residential house for them and since the company was....
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.... 10. With regard to the first point the evidence which is claimed to be additional evidence is in the form of a letter dated 6-11-1992 issued by M/s. Assam Tea Corporation. In my opinion, this evidence cannot be considered an additional evidence and the relief granted by the CIT(A) is also not on the basis of this additional evidence. The CIT(A) rightly stated that this letter was only a clarification made by M/s. Assam Tea Corporation Ltd. In my opinion, even this clarification was not needed because the main and the only relevant evidence i.e agreement between the assessee and M/s. Assam Tea Corporation Ltd. was already in the file of the Assessing Officer. The learned Judicial Member has got an impression that this agreement was not on the record of the Assessing Officer and hence the mistake. 11. With regard to the next point I am certainly of the view that the CIT(A) considered the additional evidence without giving opportunity to the Assessing Officer. I do not find a copy of the resolution dated 10-5-1990 on record of the Tribunal. Even before me at the time of hearing neither of the parties placed before me the copy of the said resolution. It would be worthwhile to con....
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.... the Division Bench to pass the appropriate order in accordance with the majority. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT As per Bench - Originally, this appeal was filed by the Department against the order of the CIT(A), Guwahati, dated 30-3-1993 for the assessment year 1991-92. In the first two grounds the Department has come before the Tribunal with the grievance that the CIT(A) has violated the rule 46A of the Income-tax Rules, 1962. Af ter hearing both the parties the Tribunal decided the appeal filed by the Department but about the first two grounds there was a difference of opinion between the learned Judicial Member and the learned Accountant Member. According to the Judicial Member there was a violation of rule 46A by the first appellate authority and he restored the matter back to the file of the CIT(A) with the direction to redecide the issue afresh after giving the opportunity of being heard to both the Assessing Officer as well as to the assessee. But the learned Accountant Member was of the view that there was no violation of rule 46A. Therefore, the matter was restored to the President of the Incometax Appellate Tribunal, Mumbai, who accordingly appoi....