TaxTMI 
TaxTMI 
2013 (6) TMI 72
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.... Commissioner of Income-tax (Appeals) also dismissed the appeal of the assessee forming the aforesaid decision. Before the Commissioner of Income-tax (Appeals), the assessee had filed copies of certain agreements purportedly entered into between the assessee and its group companies to whom the management fee was given. The Commissioner of Income-tax (Appeals) admitted this fresh evidence but still came to the conclusion that the assessee was unable to lead any credible evidence to prove that for carrying on the business it had received any inputs from the said group companies and the money to them became payable. The assessee preferred the appeal before the Income-tax Appellate Tribunal. Along with this appeal application for leading additional evidence under rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 (hereinafter referred to as "the Rules") was filed as the assessee wanted to produce some further evidence which he did not produce before the Assessing Officer and even the Commissioner of Income-tax (Appeals). The Income-tax Appellate Tribunal had admitted that the evidence allowing the application of the assessee under rule 29 of the Rules and remitted the case back....
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....nt or witness or affidavit, etc., to enable it to pass orders or for any other substantial cause. It was, thus, submitted that the assessee had no right to move any application for additional evidence and in so far as the Tribunal is concerned, it did not suo motu thought it proper to ask for the production of these documents. Ms. Kavita Jha, learned counsel appearing for the assessee, on the other hand argued that this rule is to be given liberal interpretation inasmuch as purpose behind the rule was to do substantial justice in the matter and/or to prevent failure of justice. She submitted that the Tribunal had categorically recorded the reasons, while allowing the production of additional documents, to the effect that these were necessary to impart substantial justice. We have already reproduced the language of rule 29 of the Rules. The Tribunal has given following justification while permitting additional evidence: "It is clear that such is not the situation at hand. Rule 29, in general, forbids the parties to the appeal from producing additional evidence either oral or documentary before the Tribunal. However, if the Tribunal requires any document to be produced to enable it....
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....evidence is the aspect which would be examined while answering the second question). The fact remains that it is not the Tribunal, while hearing the case, which asked for the production of these documents of its own. On the contrary, the Tribunal acted upon the application preferred by the assessee. That would clearly mean that it has allowed the assessee, i.e., the party to the appeal to produce the evidence. Whether this course of action would be permissible for the Tribunal under rule 29 of the Rules ? While arguing that the Tribunal is empowered to do so even in an application filed by one of the parties for production of additional evidence, Ms. Kavita Jha referred to certain judgments. Therefore, it would be of benefit to take stock of those judgments at this stage. The first case referred to by the learned counsel for the assessee is the judgment of the Madras High Court in Anaikar Trades and Estates Pvt. Ltd. (No. 2) v. CIT [1990] 186 ITR 313 (Mad). In that case, the assessee sold several plots of land to various parties and the value of the properties shown in the documents of sale was Rs. 2,58,338. The Valuation Officer of the Department estimated the market value of th....
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....der to correctly adjust the liability of the assessee for payment of tax, it would be necessary to remit the matter to the Appellate Assistant Commissioner for fresh consideration on the basis of affidavits filed by the purchasers of the property. The High Court also noted that there was sufficient reason for the Revenue that the Revenue was prevented by sufficient cause for not perusing these affidavits earlier as these were available in different sections of the Department and were not made available to the assessing authority or even the first appellate authority and the assessee could not be permitted to take advantage of an inadvertent omission on the part of the Department to rely on these affidavits at the earlier stage or at the appellate stage. The ambit of rule 29 of the Rules, in the process, was discussed in the following manner (page 318): "We may in this connection refer to the scope of the powers of the Tribunal under rule 29 of the Rules. In R. S. S. Shanmugam Pillai and Sons v. CIT [1974] 95 ITR 109 (Mad), this court had occasion to go into the question of the powers of the Tribunal to entertain or reject evidence. While accepting that the Tribunal has got a wide ....
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....explained. The Assessing Officer had found certain cash entries and was of the opinion that since the assessee could not explain the same, he made additions on the ground of these were unexplained cash entries. It so happened that the assessee had received a sum of Rs. 13.65 lakhs from Bharat Union Agencies (P.) Ltd. ("BUA") in cash on August 3, 1953, and paid a sum of Rs. 13,64,250 to Jaipur Traders Ltd. ("JT") on August 7, 1953, also in cash. It was in this backdrop the assessee was asked to disclose the source from which this money came. The assessee was in control of both JT and BUA. Avoiding the details with which we are not concerned and coming to the aspect which is relevant for us, when the matter reached the Tribunal, counsel for the Revenue sought permission of the Tribunal to place on record the balance-sheet and the profit and loss account of JT for the relevant period as additional evidence. This request of the Revenue was opposed by the assessee. However, the Tribunal was of the opinion that additional evidence sought to be addressed was relevant and the point in issue would be of assistance to it in deciding the appeal. It, thus, passed an order overruling the object....
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....oper disposal of the appeal before it, in that case, the Tribunal could straigthtaway reject the evidence, which was sought to be produced for the first time at the stage of the appeal." We may also quote the following observations of the Calcutta High Court in ITO v. B. N. Bhattacharya [1978] 112 ITR 423 (Cal). In that case, the court even permitted the additional evidence before it at appellate stage where the question was as to whether the notice was properly served upon the assessee or not. Record of the process server and the Income-tax Officer were produced and the objection of the assessee that such evidence could not be produced was turned down invoking the power to admit such evidence under Order 41, rule 27(1) of the Code of Civil Procedure. The following pertinent observations were made in the process (page 427) : "But as was observed by the Supreme Court in the case of K.Venkataramaiah v. A. Seetharama Reddy, AIR 1963 SC 1526, that under rule 27(1) of Order 41 of the Code of Civil Procedure, the appellate court has the power to allow additional evidence not only if it requires such evidence 'to enable it to pronounce judgment', but also for 'any other subs....
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....t on the materials before it without taking into consideration the additional evidence sought to be adduced. The legitimate occasion, therefore, for exercise of discretion under this rule is not before the appellate court hears and examines the case before it, but arises when on examining the evidence as it stands, some inherent lacuna or defect becomes apparent to the appellate court coming in its way to pronounce judgment, the expression "to enable it to pronounce judgment" can be invoked. Reference is not to pronounce any judgment or judgment in a particular way, but is to pronounce its judgment satisfactory to the mind of court delivering it. The provision does not apply where with existing evidence on record the appellate court can pronounce a satisfactory judgment. It is also apparent that the requirement of the court to enable it to pronounce judgment cannot refer to pronouncement of judgment in one way or the other but is only to the extent whether satisfactory pronouncement of judgment on the basis of material on record is possible. In Arjan Singh v. Kartar Singh, AIR 1951 SC 193, while interpreting the provisions of Order 41, rule 27, the court remarked as follows: "The ....