Gauhati High Court
Commissioner Of Income-Tax vs Poddar Swadesh Udyog (P.) Ltd. on 7 December, 2006
Equivalent citations: (2007)2GLR97
Author: D. Biswas
Bench: D. Biswas, A. Hazarika
JUDGMENT D. Biswas, J.
1. This appeal under Section 260A of the Income-tax Act, 1961 is directed against the order dated 3.10.2002 passed by the Income-tax Appellate Tribunal, Guwahati Bench, Guwahati in I.T.A. No. 366 (Gau.) of 1995, The appeal was admitted by this court on 28.3.2003 for hearing on the following substantial question of law:
Whether on the facts and in the circumstances of the case, the Tribunal was justified and correct in law in upholding the order, of the first appellate authority deleting the entire addition of Rs. 52,72,050 on account of the alleged purchase of M.S. Scraps ?
2. The respondent-assessee claimed a loss of Rs. 15,79,047 in the return of income filed for the Assessment Year 1992-93. The Assessing Officer by the assessment order dated 25.11.1994 disallowed purchases of raw materials in respect of nine parties amounting to Rs. 52,72,050 for alleged failure of the assessee to furnish purchase details in exercise of powers under Section 143(3). The assessee preferred an appeal before the Commissioner of Income-tax (Appeals) and furnished separate sheets reflecting accounts position of the nine parties along with other evidence. The CIT (Appeals) held that the entire disallowance of Rs. 52,72,050 for alleged purchases of raw materials was not sustainable and deleted the same. The revenue preferred an appeal before the learned Tribunal, Guwahati Bench at Guwahati. The appeal registered as ITA No. 366 (Gau.)/1995 was dismissed by the learned Tribunal on 3.10.2002 relying upon the decision of the Apex Court reported in 53 ITR 225. Being aggrieved thereby, the Revenue has preferred this appeal challenging the legality of the judgment of the authorities below.
3. We have heard Mr. U. Bhuyan, learned Counsel for the Revenue and Mr. G.K. Joshi, learned senior counsel assisted by Mr. R.K. Joshi, learned Counsel for the respondent-assessee.
4. The question before the learned Tribunal was whether the CIT (Appeal) could have taken into consideration the additional evidence at the appellate stage and to act upon it without allowing the Assessing Officer a reasonable opportunity to examine the evidence and/or cross-examine the witnesses produced by the appellant or to produce any evidence to rebut the value of additional evidence produced at the appellate stage.
5. The learned Tribunal took into consideration the fact that the assessee had produced the bills of purchases, challans, truck numbers, stock registers, copies of ledger accounts of purchases of raw materials including MS Scrapes before the CIT (Appeals) which were not produced before the Assessing Officer. The authorized representative contended before the learned Tribunal that the documents could not be produced before the Assessing Officer as the wife of the assessee was involved in a serious accident at Mumbai. The learned Tribunal noticed that the payments were made through cheques and all the transactions are recorded in the books of account. The Tribunal also observed that the assessee's case is covered by the Central Excise Rules and the excise authority did not find any irregularity in the books of account. The Tribunal further observed that the books of account were produced before the Assessing Officer and the new details filed before the CIT (Appeals) are in continuation of the original evidence. Observing, thus, the learned Tribunal concluded that the provisions of Rules 46A(2), (3) and (4) are not applicable in the instant case. The learned Tribunal also relied upon various decisions of different High Courts including this High Court in up-holding the judgment and order of the CIT (Appeals).
6. Section 250 of the Income Tax Act provides for the procedure in appeal. Sub-sections (4) and (5) read as follows:
250. (1)...
(2)...
(3)...
(4) The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals).
(5) The Commissioner (Appeals) may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if the Commissioner (Appeal) is satisfied that the omission of that ground from the form of appeal was not willful or unreasonable.
7. It would appear from above that the CIT (Appeals) has the powers to make such further enquiry as he thinks fit or, alternately, he may require the Assessing Officer to make such further enquiry and to report the result of the same to him. It is clear from the above provision that in exercise of powers under this section, the Commissioner is also entitled to admit additional evidence which he may think necessary for facilitating further enquiry. The powers of the Commissioner (Appeals) are undoubtedly very wide. Even otherwise, the powers of a statutory appellate authority are co-terminus with the powers of the authorities at the first instance. There cannot be any dispute to this principle of law.
8. Rule 46A provides for production of additional evidence before the Deputy Commissioner and Commissioner (Appeals). It would appear from Clauses (b) and (c) of Sub-rule (1) of Rule 46A that the appellate authority is empowered to allow the assessee to produce additional evidence where the assessee was prevented by sufficient cause from producing the evidence. In the instant case, the assessee had submitted that he had to go to Bombay to attend his wife who had met with an accident for which he could not produce the documents. The CIT (Appeals), as well as the learned Tribunal appear to have accepted this contention. Sub-rule (3) puts restrictions on the appellate authority from taking into account any evidence produced under Sub-rule (1) without giving reasonable opportunity to the Assessing Officer to examine the evidence and/or to produce any evidence, etc. In the instant case, admittedly, the Assessing Officer was not given any opportunity as provided in Sub-rule (3). From that point of view, there appears to be an irregularity in the matter. But the provision in Sub-rule (4) permits the appellate authority to direct production of any document and/or to examine any witness to enable them to dispose of the appeal. For this irregularity, it would not be in aid of justice to refer the matter back to the Assessing Officer again since both the CIT (Appeals) as well as the learned Tribunal rendered concurrent findings of fact.
9. We, have considered the decisions in Commissioner of Income-tax, U.P. v. Kanpur Coal Syndicate reported in 53 ITR 225; Keshav Mills Co. Ltd. v. Commissioner of Income-Tax, Bombay North, Ahmedabad reported in 56 ITR 365; B.L. Choudhury v. Commissioner of Income-tax Orissa reported in 105 ITR 371 and Smt. Prabhavati S. Shah v. Commissioner of Income-tax reported in 231 ITR 1. It would appear from the ratio in these decisions that the powers of the appellate authority are co-extensive with that of the Assessing Officer. Therefore, the CIT (Appeal) as well as the learned Tribunal do not appear to have committed any error in law in relying upon the documents filed subsequently at the appellate stage, which are in continuation of the books of account and other documents filed before the Assessing Officer.
10. For discussion above, the appeal is dismissed. The question formulated is answered in negative in favour of the respondent-assessee and against the appellant-Revenue.