Order cannot be Passed without Considering Application for Producing Additional Evidence

The assessee had submitted an application seeking leave to produce additional evidence at the stage of appeal as per Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963.
The assessee vide its application produced certain additional documents including reference to certain cheques that explains the source of the expenditure.
The Tribunal held that expenditure amounting to Rs. 80 Lakhs was required to be treated as unexplained expenditure as per Section 69C of Income Tax Act, 1961 (hereinafter referred to as “the Act”)

The main contention of the assessee was that the Tribunal did not consider the documents additionally produced while passing the impugned order. Also, the Tribunal had not discussed on the matter that whether such additional documents could be admitted as evidence at the appellate stage or not and thereafter considered.

The main contention of the Department was that the documents which the appellant seek to produce before the Tribunal were available with the appellant at the stage when the assessment was made. However, the same were not produced before the Assessing authority. This may cast certain doubt upon the reliability of evidence.

The Rule 29 states that “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.”

The High Court of Bombay held that ITAT does have the power to permit production of additional evidence if there exists sufficient reason to do so. The Tribunal is duty bound to consider the application seeking leave to produce additional evidence at the appellate stage. Since the same has not been done in the present case, the High Court remanded the matter back to the Tribunal to dispose-off the application of assessee for producing additional evidence before the Tribunal before passing any order.

The Tribunal is duty bound to dispose-off any application made by the assessee to produce additional evidence before passing any assessment order.

Source: [2020] 116 taxmann.com 11 (Bombay) Braganza Construction (P.) Ltd. v. Assistant Commissioner of Income-tax, Circle-2(1), Panaji*

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