ITAT erred in rejecting application for admission of additional evidence on the ground that application was not made either before the Assessing Officer or CIT (Appeals)
In a recent judgment, Hon’ble Chhattisgarh High Court has held that ITAT committed grave legal error in rejecting the application for admission of additional evidence summarily as the ITAT was greatly influenced with the fact that application for additional evidence was not made either before the Assessing Officer or CIT (Appeals) without considering the fact as to whether the documents filed by the assessee were required for just and proper disposal of the appeal in light of Rule 29 of the ITAT Rules.
ABCAUS Case Law Citation:
4535 (2025) (04) abcaus.in HC
Important Case Laws relied upon by Parties:
Jagdish Prasad Patel (dead) Through Legal Representatives and another v. Shivnath and others
Parsotim Thakur v. Lal Mohar Thakur
Velji Deoraj & Co. v. Commissioner of Income-tax
In the instant case, the appellant assessee had challenged the order passed by the ITAT in rejecting the application for admission of additional evidence filed under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963.
The Assessing Officer (AO) had passed an order of assessment and holding a sum deposited by the appellant in his bank account as unexplained money under the provisions of Section 69 A of the Income Tax Act, 1961 (the Act) and made an addition to the said amount back to the total income of the assessee.
Feeling aggrieved against the order of assessment, the appellant herein preferred an appeal before the Commissioner of Income Tax (Appeals) which was dismissed.
Assailing the order passed by the CIT (Appeals), the appellant further preferred an appeal before the Income Tax Appellate Tribunal (ITAT) and also filed an application for production of additional evidence on record.
However, ITAT dismissed the said appeal by the impugned order and upheld the addition made by the Assessing Officer as affirmed by CIT(A).
Before the Hon’ble High Court, the assessee contended that his application for admission fo additional evidence was not considered on merits and it was simply rejected on the ground that the same was not filed before the Assessing Officer or the CIT (Appeal) whereas it ought to have been considered in proper perspective in accordance with Rule 29 of the ITAT Rules as the said documents were necessary for just and proper disposal of the appeal. The assessee relied upon the decision of the Hon’ble High Court.
The Hon’ble High Court observed that Rule 29 of the ITAT Rules states that the parties to the appeal are not entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may alow such evidence to be adduced.
The Hon’ble High Court further observed that the provision under Rule 29 of the ITAT Rules is akin to Order 41 Rule 27(b) of the CPC which states that additional evidence can be admitted where the appellate court requires any document to be produced or any witness to be examined to enable the court to pronounce judgment or for any substantial cause.
The Hon’ble High Court noted that Privy Council held that additional evidence can be admitted, but it must be the court that requires it. Further, the Bombay High Court relying upon the decision of the Privy Council has held that the admission of additional evidence is dependent solely on the requirement of the court and it is for the court to decide whether for pronouncing its judgment or for any other substantial cause it is necessary to have the additional evidence before it.
The Hon’ble High Court also noted that Hon’ble Supreme Court while dealing with the provisions contained in Order 41 Rule 27 of the CPC held that the general principle is that “the appellate court should not travel outside the record of the lower court and cannot take any evidence in appeal. However, as an exception, Order 41 Rule 27 CPC enables the appellate court to take additional evidence in exceptional circumstances. The appellate court may permit additional evidence only and only if the conditions laid down in this Rule are found to exist. The parties are not entitled, as of right, to the admission of such evidence. Thus, the provision does not apply, when on the basis of the evidence on record, the appellate court can pronounce a satisfactory judgment. The matter is entirely within the discretion of the court and is to be used sparingly. Such a discretion is only a judicial discretion circumscribed by the limitation specified in the Rule itself.
In view of the facts of the instant case, parameters laid down by the Supreme Court and also the order passed by the Co-ordinate Bench, the Hon’ble High Court opined that it was quite vivid that the ITAT was greatly influenced with the fact that application for additional evidence was not made either before the Assessing Officer or CIT (Appeals) and rejected the said application without considering the fact as to whether the documents filed by the assessee are required for just and proper disposal of the appeal in light of Rule 29 of the ITAT Rules. Hence, the ITAT has committed grave legal error in rejecting the application summarily and dismissing the appeal.
Consequently, the Hon’ble High Court set aside the impugned order rejecting the application filed under Rule 29 of the ITAT Rules and subsequently, the appellate order was also set aside. The application under Rule 29 of the ITAT Rules for production/admission of additional evidence as well as the appeal was restored for hearing and disposal afresh in accordance with law, expeditiously.
Accordingly, the substantial question of law is answered in favour of appellant/assessee and against the Revenue.
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