(Arising out of order dated 30.09.2024 passed by the Income Tax Appellate Tribunal, Raipur v. The Income Tax Officer Ward - 3
Case Details
Digitally signed by AJAY KUMAR DWIVEDI Date: 2025.05.01 14:24:25 +0530 1 2025:CGHC:18277-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR TAXC No. 53 of 2025 (Arising out of order dated 30.09.2024 passed by the Income Tax Appellate Tribunal, Raipur Bench, Raipur in ITA No.390/RPR/2023) Mahesh Sharma And Sons 401, B Block, Fafadih, Raipur 492001 Chhattisgarh. Pan Aaihm6914p. ... Appellant. versus The Income Tax Officer Ward - 3(1), Raipur Chhattisgarh. ... Respondent. For Appellant For Respondent : :
Legal Reasoning
Mr. S. Rajeshwar Rao, Adv. Mr. Ajay Kumrani, Adv on behalf of Mr. Amit Chaudhari, Adv. Hon'ble Shri Sanjay K. Agrawal & Hon'ble Shri Deepak Kumar Tiwari, JJ Judgment on Board (23/04/2025) Sanjay K. Agrawal, J 1. This appeal preferred under Section 260A of the Income Tax Act, 1961 (for short the "IT Act") has been admitted for final hearing on 28.02.2025 by formulating the following substantial questions of law:- “1. Whether the ITAT and CIT(A) both are justified in holding that the approval granted 2 U/s 151 of ITAT, 1961 by Principal Commissioner of Income Tax and issuance of notice U/s 148 of the Income Tax for assessment year 2014-15 are valid? 2. Whether the ITAT is justified in rejecting the application for admitting additional evidence filed under Rule 29 of ITAT Rules, 1963, by recording a finding which is perverse to the record?" 2. The aforesaid substantial questions of law arises for consideration on the following factual backdrop:- (2.1) The appellant/assessee herein filed income tax return for assessment year 2014-15, showing his income below taxable limits. The Assessing Officer initiated re-assessment proceedings and issued notice under Section 148 of the IT Act, with the approval of Principal CIT, Raipur-1 granted under Section 151 of the IT Act. The said assessment was completed on 23.03.2022 under Section 144 r/w Section 147 of the IT Act and the total income of the appellant was assessed at Rs.2,39,58,500/- after making addition of (i) Rs.1,29,08,500/- treating the said amount of cash deposited in the appellant's bank account as unexplained money under Section 69-A of the IT Act and (ii) Rs.1,10,50,000/-, as long term capital gains. (2.2) Feeling aggrieved by the order of assessment, the appellant herein preferred an appeal before the Commissioner of Income Tax (Appeals), which was dismissed on 27.10.2023 by affirming the 3 order of Assessing Officer. Assailing the order passed by the CIT (Appeals), the appellant further preferred an appeal before the Income Tax Appellate Tribunal (ITAT). Further, during the pendency of the appeal, the appellant has also filed an application for admitting additional evidence on record under Rule 29 of the Income-Tax (Appellate Tribunal) Rules, 1963 (for short the "ITAT Rules"). However, learned ITAT did not consider the said application on merits and dismissed the same by the impugned order dated 30.09.2024 holding that the Tribunal cannot be used as a platform to place all the documents/evidence under Rule 29 of the ITAT Rules, which the assessee chooses to avoid submitting before the authorities below, and thereby, dismissed the said appeal by the impugned order dated 30.09.2024. Hence, this appeal has been preferred. 3. Mr. S. Rajeshwar Rao, learned counsel appearing for the appellant would submit that the application filed by the assessee under Section 29 of the ITAT Rules for production/admission of additional evidence on record was not considered on merits and it was simply rejected on the ground that the same was not filed before the CIT (Appeals), 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. In support of his contention, he would rely upon the 4 decision of this Court rendered in the matter of Shrivastava Associates Vs. Income Tax Officer, TAXC No.230/2024 [2025:CGHC:10186-DB]. In view of such submission, he prays to allow the appeal and set-aside the impugned order. 4. On the other hand, Mr. Ajay Kumrani, learned counsel appearing on behalf of Mr. Amit Chaudhari, learned Standing Counsel for the Income Tax Department, would support the order impugned and submit that the application of the assessee has rightly been rejected and hence, prays to dismiss the appeal. 5. We have heard learned counsel for the parties and considered their rival submissions and also went through the record with utmost circumspection. 6. In order to answer the aforesaid two substantial questions of law, firstly, substantial question No.2, is required to be dealt with, as answer to substantial question No.1 would depend upon the outcome of substantial question No.2. Answer to substantial question No.2 7. The above substantial question of law formulated by this Court relates to rejection of application under Rule 29 of the ITAT Rules i.e. admission of additional documents, by the impugned order passed by the ITAT. 5 8. The ITAT Rules have been framed in exercise of the powers conferred by sub-section (5) of Section 255 of the IT Act. Rule 29 of the ITAT Rules states as under: - “Production of additional evidence before the Tribunal. 29. The parties to the appeal shall not be 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 allow such evidence to be adduced.” 9. A careful perusal of the aforesaid rule would show 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 in order 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 allow such evidence to be adduced. 6 10. This provision under Rule 29 of the ITAT Rules is akin to Order 41 Rule 27(b) of the CPC, which states as under: - "27. Production of additional evidence in Appellate Court.- (1) The parties to an appeal shall not be entitled to produce additional evidence, whether oral or documentary, in the Appellate Court. But if— (a) xxx xxx xxx (aa) xxx xxx xxx (b) the Appellate Court requires any document to be produced or any witness to be examined to enable it to pronounce judgment, or for any other substantial cause, the Appellate Court may allow such evidence or document to be produced or witness to be examined. (2) Whenever additional evidence is allowed to be produced by an Appellate Court, the Court shall record the reason for its admission." 11. Order 41 Rule 27(b) of the CPC 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 other substantial cause. 12. The Privy Council in the matter of Parsotim Thakur v. Lal Mohar Thakur1 held that additional evidence can be admitted, but it must be the court that requires it, and observed as under: - “By the terms of Order XLI, r. 27(b) it is only where an appellate court “requires” it (that is, finds it needful) that additional evidence can be admitted. It may be 1 AIR 1931 PC 143 7 required to enable the Court to pronounce judgment, or for any other substantial cause, but it must be the Court that requires it. The power cannot be exercised on an application by a party before the appeal is heard.” 13. Similarly, in Velji Deoraj & Co. v. Commissioner of Income-tax 2 , the Bombay High Court relying upon the decision of the Privy Council in Parsotim Thakur (supra) 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, and observed as under: - “Now, the power of the Tribunal to admit additional evidence in appeal is governed by rule 29 of the rules and orders relating to the Appellate Tribunal. That rule is similar in terms to Order 41, rule 27, of the Code of Civil Procedure. Now, it is well settled that the admissibility of additional evidence in appeal under the provisions of Order 41, rule 27, of the Civil Procedure Code is made to depend not upon the relevancy or materiality to the issue before the court of the evidence sought to be admitted or upon the fact whether or not the applicant had sufficient opportunity of adducing the evidence at an earlier stage, but upon whether or not the appellate court requires the evidence to enable it to pronounce judgment or for any other substantial cause. The admission of additional evidence at the appellate stage is not referable to any right of the party to produce the evidence but 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 mere fact that the evidence sought to be produced is vital and important does not provide a 2 [1968] 68 ITR 708 (Bombay) 8 substantial cause to allow its admission at the appellate stage especially when the evidence was available to the party at the initial stage and had not been produced by him. As has been observed by the Privy Council in Parsotim v. Lal Mohar [(1931) L.R. 58 I.A. 254 : A.I.R. 1931 P.C. 143.], the rule is not intended to allow a litigant who has been unsuccessful in the lower courts to patch up the weak parts of his case and fill up omissions in the court of appeal. Mr. Mehta referred to the observations of Ameer Ali J. in the Privy Council case, Indrajit Pratap Bahadur Sahi v. Amar Singh [(1923) L.R. 50 I.A. 183 : A.I.R. 1923 P.C. 128.] , viz., that the jurisdiction of an appellate court under Order 41, rule 27, of the Code of Civil Procedure, 1908, to admit additional evidence is not confined to cases in which the court itself discovers a lacuna or defect and requires evidence to fill up or remedy it. Under the words “or for any other substantial cause” an appellate court has a discretion to admit further evidence upon the application of a party.” 14. The Supreme Court in the matter of Jagdish Prasad Patel (dead) Through Legal Representatives and another v. Shivnath and others3 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, 3 (2019) 6 SCC 82 9 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”. Relying upon the earlier decision in the matter of the Union of India v. Ibrahim Uddin4, their Lordships observed as under: - “30. In Union of India v. Ibrahim Uddin, (2012) 8 SCC 148 : (2012) 4 SCC (Civ) 362, this Court held as under : (SCC pp. 167-68 & 170, paras 36-37, 40 & 47) “36. 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. (Vide K. A. Seetharama Reddy5, Venkataramiah v. Lala Municipal Corpn., Greater Bombay v. Pancham6, Rameshwarlal Soonda Ram v.