Income Tax Appellate Tribunal - West Bengal
Income-Tax Officer (Exemptions) vs Bajoria Foundation on 2 January, 2001
Equivalent citations: [2002]254ITR65(CAL)
ORDER
Pramod Kumar (Accountant Member)
1. This appeal, filed by the Revenue, is directed against the order dated October 31, 1995, passed by the learned Commissioner of Income-tax (Appeals-XIII), Calcutta, in the matter of order under Section 144 for the assessment year 1991-92. Solitary grievance of the Revenue is reproduced below :
"That, on the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) erred in deleting the income of the trust of Rs. 6,68,770 by way of granting exemption under Section 11 of the Income-tax Act, 1961, by admitting fresh evidence in violation of Rule 46A of the Income-tax Rules."
2. A brief facts of the case, as relevant for the purpose of this appeal, are that the assessment of the assessee-trust was completed under Section 144 as there was no compliance of both the notices issued by the learned Assessing Officer. The Assessing Officer observed that the assessee has made donations, in odd amounts, to Anandlok Hospital and that the assessee had also made a donation of Rs. 25,000 to Birla Heart Research Centre the purpose of which was not clear. On these facts, the learned Assessing Officer inferred that the payments are for non-charitable purposes and, accordingly, it was concluded that disability under Section 13(1)(c) was attracted. Additions were made to the nil returned income, on account of (i) Rs. 5,07,022 on account of charities and donations inferred to be not eligible for deduction as evidence for eligibility was not filed ; (ii) Rs. 1,50,747 being unspent amount at the end of the year ; and (iii) Rs. 11,000 being donations received towards corpus. In appeal, the Commissioner of Income-tax (Appeals), after taking into account the submissions of the assessee as well as of the learned Assessing Officer, deleted all the additions on merits. Aggrieved by the order of the Commissioner of Income-tax (Appeals), the Revenue is in appeal before us.
3. We have heard the rival submissions made by Shri Mahalik, the learned Departmental Representative and Shri Salarpuria, learned counsel for the assessee. We have also perused the records and deliberated upon judicial precedent on the issues in appeal before us.
4. We have noticed that the sole grievance of the Revenue is against violation of Rule 46A by the learned Commissioner of Income-tax (Appeals) and that the learned Departmental Representative has not made any submissions on merits of the case. Rule 46A of the Income-tax Rules, 1962, provides that the appellant shall not be entitled to produce before the Commissioner of Income-tax (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 following circumstances :
(a) where the Assessing Officer has refused to admit the evidence which ought to have been admitted ; or
(b) where the appellant was prevented by sufficient cause from producing the evidence which was called upon to be produced 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 ground of appeal ; or
(d) where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.
5. In the present case, it is not in dispute that the assessment was done under Section 144 of the Income-tax Act and the additions made by the learned Assessing Officer were based on inferences drawn by him. It is, therefore, settled fact that sufficient inquiries were not conducted with regard to the claims made in the return of the assessee and that the case was fixed for hearing on only two dates, i.e., on September 29, 1993 and on March 16, 1994, on which there was no compliance. We have also noticed that the assessee has, in the first paragraph of the statement of facts filed before the first appellate authority, submitted that the notices for these two hearings were not received by them. We have also observed that the first hearing was fixed on just a day before limitation under Section 143(2) was to expire and thereafter next date was fixed shortly before the assessment itself was getting time barred ; between these two dates, the assessment proceedings did not get any attention from the learned Assessing Officer. When the assessment itself was done under Section 144, the assessee obviously did not have opportunity of producing the evidence before the Assessing Officer. On these facts, we are of the view that the filing of additional evidence before the Commissioner of Income-tax (Appeals) was clearly covered by clause (c) above. A view may indeed be taken, as taken by the Gujarat High Court in the case of CIT v. Vali-mohmed Ahmedbhai [1982] 134 ITR 214, that the Commissioner of Income-tax (Appeals) cannot admit any additional evidence placed under Rule 46A(1) unless the Income-tax Officer has been allowed a reasonable opportunity to examine the evidence, but it is not necessary to consider that aspect of the matter since in the case before us the Assessing Officer not only had an opportunity to examine all the evidence filed by the assessee but, availing this opportunity, he even filed a rejoinder on the same which was duly considered by the learned Commissioner of Income-tax (Appeals). In this regard, we may however refer to the observations of Shri Ch. G. Krishnamurty, the then President and while articulating views on behalf of the Delhi Bench of this Tribunal, in the case of Electra (Jaipur) (Pvt.) Ltd. v. IAC of I. T. [1988] 26 ITD 236, which are reproduced below (page 239) :
"After going through the evidence placed before us, considering the facts of this case and going through the orders of the authorities below, we are of the view that the assessee should not be disqualified from producing this evidence merely on the ground that the evidence was not placed before the authorities below. The sole purpose of judiciary as well as of the revenue is to get at the truth. If the truth is that the payment of commission was genuine and was dictated by the business needs, such a payment should not be disallowed merely on the ground that the assessee was unable to lead proper evidence or on the ground that the evidence led was of such a nature as to create a very high degree of suspicion. There should be no objection to consider any evidence produced, to test its authenticity relevance and then to act on it. If the evidence is genuine, reliable, proves the assessee's case, then the assessee should not be denied the opportunity. But on the other hand, if the evidence led turns out to be spurious, fabricated or of irrelevant nature, such consequences, as are provided for under the law, will ensue. It is, therefore incorrect to shut out an assessee in the process of administration of justice from leading evidence to prove its case. The earlier inability to lead evidence, should not be held against the assessee unless it is known to the court or suggested to the court or there was evidence to suspect that the evidence was fabricated. There is no such suggestion in this case. We are, therefore, of the opinion that the request of learned counsel of the assessee is reasonable and that the request made by the department for the refusal of its admission is not proper. . ."
6. We also find that the Orissa High Court in the case of B. L. Choudhury v. CIT [1976] 105 ITR 371, have observed that by the virtue of Section 250 wide provision has been made conferring jurisdiction on the first appellate authority to make such inquiry as he deems fit and that the Commissioner of Income-tax (Appeals) does not exceed his jurisdiction if he asks or allows the appellant to file additional evidence in the matter he thinks fit. The Bombay High Court, in the case of Smt. Prabhavati S. Shah v. CIT [1998] 231 ITR 1, have observed that Rule 46A does fetter the right of the assessee to produce evidences but it does not restrain the Commissioner of Income-tax (Appeals) powers under Section 250(4) or 250(5) of the Income-tax Act and that this Rule appears to ensure that evidence is primarily led before the Assessing Officer. In view of this judgment of the Bombay High Court, if prima facie an information is necessary to examine the claim of the assessee, the Commissioner of Income-tax (Appeals) should consider the necessary evidence in exercise of his powers under Sub-sections (4) and (5) of Section 250. It is trite that the rules have to be framed within the scope of main provision and that a rule, which travels beyond or is inconsistent with or is repugnant to the provisions in the statute will be ultra vires and void. Rule 46A was introduced with effect from April 1, 1973, and as a result of insertion of Section 295(2)(mm) in the Income-tax Act which empowered the Board to provide for the circumstances in which, the condition subject to which and the manner in which Commissioner of Income-tax (Appeals) may permit an appellant to produce an evidence which the appellant did not produce or was not allowed to produce before the Assessing Officer. However, these powers of the Board, which have been vested in them for carrying out for the purposes of the Act, have to be exercised in such a judicious manner so as not to make any statutory provision redundant and nugatory. The rules made in exercise of these powers should also not be interpreted in such a manner as to narrow down, dilute or curtail the statutory powers, conferred on the Commissioner of Income-tax (Appeals), by the provisions of Section 250(4) or 250(5) of the Income-tax Act, 1961. Therefore, a harmonious interpretation of Section 250, even read with Rule 46A, cannot but mean that if facts of a case warrant that, before disposal of any appeal, the Commissioner of Income-tax (Appeals) is required to make further inquiries, either on his own or through the Assessing Officer, he is not denuded of the powers to do so because of the provisions of Rule 46A.
7. We are conscious to the esteemed views of the jurisdictional High Court that there has to be a reasonable explanation for non-filing of such additional evidence before the Assessing Officer. The Calcutta High Court, in the case of Raj Kumar Srimal v. CIT [1976] 102 ITR 525, had an occasion to examine this aspect of the matter wherein Justice Sabyasachi Murkerji (as he then was) observed (page 529) :
"It is true, as was contended by counsel for the assessee, that the Appellate Assistant Commissioner has very wide powers and in the interests of justice he can make further enquiry and he can admit new ground of appeal. He can also give deductions not claimed by the assessee, as was held by this court in the case of Union Coal Co. Ltd. v. CIT (1968] 70 ITR 45 (Cal). In this case counsel for the revenue also did not dispute that in certain circumstances the Appellate Assistant Commissioner had jurisdiction to admit new grounds if it was necessary to admit new evidence. The point in this case is not whether the Appellate Assistant Commissioner is entitled to admit new ground or evidence either suo motu or at the invitation of the parties. In this case it is apparent that the Appellate Assistant Commissioner was not acting suo moto 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, a 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."
8. It is, therefore, necessary that the appellate authority has to be satisfied on bona fides of the reasons of filing evidence--an aspect which has also been referred to in Electro's case [1988] 26 ITD 236 (Delhi). In the case before us, the assessee's claim before the Commissioner of Income-tax (Appeals) has been that "adequate opportunity has not been given for hearing" and that "order under Section 144 is not justified". It was in the background of these facts that the assessee submitted some fresh evidence in the shape of Section 80G exemption certificate of Anandlok Hospital and papers supporting the corpus donations. All other papers like audit report, list of charities and donations and financial statements were already filed before the Assessing Officer, along with the income-tax return. It is also not the Revenue's case that filing of additional evidence before the Commissioner of Income-tax (Appeals) smacks of any mala fides or deliberate intent to act contrary to the scheme of the Income-tax Act. We, therefore, support admittance of additional evidence by the Commissioner of Income-tax (Appeals).
9. We have already expressed our view, in paragraph 4 above, that on the given facts, filing of additional evidence before the Commissioner of Income-tax (Appeals) was covered by Rule 46A(1)(c) of the Income-tax Rules, 1962. In the light of the subsequent deliberations, we also find that the Commissioner of Income-tax (Appeals) admission of additional evidence was clearly within the scheme of powers vested in him under Section 250(4) of the Income-tax Act because, as held by the Bombay High Court in the case of Prabhavati S. Shah [1998] 238 ITR 1, if prima facie an information is necessary to examine the claim of the assessee, the Commissioner of income-tax (Appeals) should consider the necessary evidence in exercise of his powers under Section 250(4). It is settled in law that when a statutory authority has the powers to do something, then it has a corresponding duty to exercise such powers whenever circumstances warranting exercise of such powers exist. The case before us, in our considered view, was a fit case where the Commissioner of Income-tax (Appeals) should have exercised his powers to make further inquiries. We, therefore, see no legal infirmity in the Commissioner of Income-tax (Appeals) proceeding on the merits of the claim and admitting necessary additional evidences for that purpose. We also find support from the view taken by a co-ordinate Bench of this Tribunal in the case of Electra (Jaipur) Pvt. Ltd. [1988] 26 ITD 236 (Delhi).
10. In view of the above discussions, we support the conclusions arrived at by the learned Commissioner of Income-tax (Appeals) and decline to interfere in the matter.
11. In the result, the Revenue's appeal is dismissed.