TaxTMI 
TaxTMI 
TaxTMI 
2007 (3) TMI 292
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....sued by M/s. Ramco Industries Ltd. that the assessee was paid large amounts by way of freight charges. The assessee claimed that he did not earn the freight receipts on which tax was deducted at source because the assessee acted on commission basis only. The amount of freight received from M/s. Ramco Industries was in turn paid by the assessee to a large number of transporters whose services were engaged for transportation of goods belonging to M/s. Ramco Industries Ltd. The assessee's function was limited to supply of trucks to M/s. Ramco Industries Ltd. and such trucks belonged to others and not the assessee. The assessee only earned commission income. Learned Assessing Officer did not accept this explanation and assessed the gross receipts as per T.D.S. certificates as the assessee's income. On the assessee's appeal learned CIT(A) carried out proceedings under section 250(4) of the Act. He called for elaborate details of accounts where the freight income was recorded. He also called for the records pertaining to parties who supplied trucks for transporting consignments for Ramco Industries Ltd. The assessee was also asked to file confirmation letters or certificates from the tru....
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.... to any ground of appeal taken by the assessee or where the assessment order itself is made without giving sufficient opportunity to the assessee to adduce evidence relevant to any ground of appeal. Provision of rule 46A enjoins upon the first appellate authority not to admit any fresh evidence unless he records in writing his reasons for its admission. Further rule 46A enjoins upon him to provide the Assessing Officer a reasonable opportunity to examine the fresh evidence or to cross examine the witness produced by the assessee or to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the assessee. 6. The provisions of section 250(4), on the other hand, empower the first appellate authority to make such further enquiry as he thinks fit or to direct the Assessing Officer to make further enquiry and report the result of the same. The provisions of section 250(4) are the provisions of long standing that existed under 1922 Act also in section 31 of that Act. In the case of CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC), the Hon'ble Supreme Court have held that the first appellate authority can do what the Assessing Officer could do ....
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.... of additional evidence if he thought it was necessary to enable him to dispose of the appeal, or if he thought it fit to make further inquiry; but under sub-rule (1) of rule 46A the appellant had a right to produce additional evidence in the circumstances mentioned in its various clauses. We are unable to agree with the submission that rule 46A or its sub-clauses is ultra vires section 250 or 251 of the Act. The rule does not affect the power of the Appellate Assistant Commissioner conferred upon him by that rule. It in addition gives a right to the appellant in the matter of production of additional evidence." 8. Similar issue came for consideration by Hon'ble Kerala High Court in the case of CIT v. K. Ravindranathan Nair [2004] 265 ITR 217. Hon'ble High Court held that the provisions of sub-rule (4) of rule 46A laid down that the powers of the appellate authority under section 250 was not affected. The Hon'ble Kerala High Court further observed "On a consideration of the provisions of rule 46A particularly sub-rule (4) thereof and the provisions of section 250(1) of the Income-tax Act conferring power on the Commissioner of Income-tax (Appeals), we are also of the view that in ....
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....otu in admitting additional evidence. If the Appellate Assistant Commissioner was acting on being invited by the assessee, then there must be some ground for admitting new evidence in the sense that there must be some explanation to show that the failure to adduce evidence earlier sought to be adduced before the Appellate Assistant Commissioner was not wilful and not unreasonable. We find from the record that no such explanation was ever offered or referred to. If without any explanation at all the Appellate Assistant Commissioner admits evidence at the invitation of the parties, he would be exercising, in our opinion, discretion not properly. He has undoubtedly a discretion vested in him to admit additional evidence in appropriate cases but admission of evidence at the instance of an appellant without any ground or explanation would not be exercising discretion properly and in such a case the appellate authority is competent, in our opinion, to interfere with the discretion exercised by the Appellate Assistant Commissioner. Reliance in this connection may be placed on the observations in the case of Ramgapal Ganpatrai Sans Ltd v. Commissioner of Excess Profits Tax, in the case of ....
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....tion for additional evidence as no notice was issued. When a prayer for additional evidence was made, it was an independent and substantive application seeking a new right. Notice of such application was necessary to the ITO and he ought to have been afforded both an opportunity to oppose it and to test the additional evidence or counter the effect thereof or produce evidence in rebuttal. No such order granting the request could have been passed behind the back of the ITO in violation of the principles of natural justice. At the cost of repetition, it be stated that notice of appeal cannot be equated with notice of a future application to lead additional evidence which no one could have anticipated or reasonably foreseen. Ordinarily, the appeal would be decided on the evidence recorded in the course of assessment proceedings. The ITO, therefore, may not, in a given case, think it necessary to remain present at the hearing of the appeal. He, however, cannot be expected to anticipate that additional evidence might be produced by the assessee in his appeal. It is for this reason that it is necessary to give him an opportunity to meet the additional evidence. The Tribunal has, therefor....
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....ct, the Appellate Assistant Commissioner is empowered to make such further inquiry as he thinks fit or to direct the Income- tax Officer to make further inquiry and to report the result of the same to him. Sub-section (5) of section 250 of the Act empowers the Appellate Assistant Commissioner to allow the appellant, at the hearing of the appeal, to go into any ground of appeal not specified in the grounds of appeal, on his being satisfied that the omission of the ground from the form of appeal was not wilful. It is clear from the above provisions that the powers of the Appellate Assistant Commissioner are much wider than the powers of an ordinary court of appeal. The scope of his powers is coterminus with that of the Income-tax Officer. He can do what the Income-tax Officer can do. He can also direct the Income-tax Officer to do what he failed to do. The power conferred on the Appellate Assistant Commissioner under sub-section (4) of section 250 being a quasi-judicial power, it is incumbent on him to exercise the same if the facts and circumstances justify. If the Appellate Assistant Commissioner fails to exercise his discretion judicially, and arbitrarily refuses to make enquiry i....