1. The assessee is in appeal before us against the order of learned Commissioner (Appeals), C-V, Mumbai dated 28-8-2002 passed for assessment year 1993-94.
2. The assessee has raised three substantial grounds of appeal. With ground No. 1 assessee has taken one sub-ground, which relates to denial of admission of additional evidence by the learned Commissioner (Appeals). The learned Counsel for the assessee at the very outset submitted that this ground be taken as preliminary ground of appeal and if assessee succeed on this ground then the impugned order would be deserves to be set aside for re-adjudication.
3. The brief facts of the case are that the learned Assessing Officer had made an addition of Rs. 21,98,000 on account of unexplained cash credits available in the books of assessee. Dissatisfied with this addition assessee carried the matter in appeal before learned Commissioner (Appeals) and he filed additional evidences under rule 46A of the Income-tax Rules in order to explain the cash credits appeared in his books. The learned first appellate authority after receiving the additional evidence called for a remand report on such evidence from the assessing officer which was received on 24-10-2002. In this remand report it appears that apart from commenting on the merits learned Assessing Officer raised an objection for entertaining the fresh evidence under rule 46A. The learned Commissioner (Appeals) after going through the remand report arrived at a conclusion that sufficient opportunities were granted to the assessee and his case does not fall in any of the exception available in sub-rule (1) of rule 46A. In this way learned Commissioner (Appeals) refused to admit the additional evidence and consequently confirmed the additions.
4. Aggrieved with this refusal the assessee is before us and Shri Hiro Rai, learned Counsel for the assessee while impugning the order of learned Commissioner (Appeals) submitted that once the learned Commissioner (Appeals) entertained the additional evidence and called for a remand report on merit cannot refuse to entertain the additional evidence, thus the order of the learned Commissioner (Appeals) deserves to be set aside on this short ground. On the other hand, learned D.R.relied upon the order of the assessing officer.
5. We have duly considered the rival contentions. Rule 46A of the Incometax Rules, 1962 has a direct bearing on the controversy, therefore, it is salutary upon us to take cognizance of this rule, which read as under: 46A. Production of additional evidence before the Deputy Commissioner (Appeals) and Commissioner (Appeals). - (1) The appellant shall not be entitled to produce before the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, otherthan the evidence produced by him duringthe course of proceedings before the assessing officer, except in the following circumstances, namely: (a) where the assessing officer has refused to admit evidence which ought to have been admitted; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce 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.
(2) No evidence shall be admitted under sub-rule (1) unless the Deputy Commissioner (Appeals), or as the case may be, the Commissioner (Appeals) records in writing the reasons for its admission.
(3) The Deputy Commissioner (Appeals), or as the case may be, the Commissioner (Appeals) shall not take into account any evidence produced under sub-rule (1) unless the assessing officer has been allowed a reasonable opportunity- (a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant.
(4) Nothing contained in this rule shall affect the power of the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the assessing officer) under Clause (a) of sub-Section (1) of Section 251 or the imposition of penalty under Section 271.
From reading of this rule it is discernible that sub-rule (1) contemplate certain conditions which are required to be fulfilled by an appellant before permission to produce additional evidence can be granted to him. Such conditions are specified in clauses (a) to (d).
Whenever any additional evidence is produced before the first appellate authority under the Income Tax Act then the appellate authority i.e.
Deputy Commissioner (Appeals) or Commissioner (Appeals) would record reasons in writing for admitting such additional evidence, as per the requirement of sub-rule (2).
6. After permitting an assessee to adduce additional evidence next stage would come that assessing officer is to be granted an opportunity to examine the evidence or the documents or to examine the witness produced by the appellant. The assessing officer would further be at liberty to produce any other evidence in rebuttal of the additional evidence produced by the assessee. Thus on reading of all these three subrules it is implicitly clear that first stage is the assessee sought permission for the admission of additional evidence, the next stage would come that such permission would be granted by recording reasons and thereafter the additional evidence would be sent to the assessing officer for examination. In the present case though from the record it is not discernible whether permission to adduce additional evidence was granted by recording reasons in writing, but impliedly it is discernible that after filing the additional evidence learned Commissioner took step provided in sub-rule (3) so it gives an inference that the additional evidence sought to be produced by the assessee was a relevant material and the learned Commissioner (Appeals) had entertained this additional evidence and only thereafter sent it to the assessing officer under sub-rule (3) for verification. Thus after calling of the remand report on merit as contemplated in sub-rule (3) of rule 46A the learned Commissioner (Appeals) is precluded with his discretion for refusing to admit the additional evidence. He can reject it as not sufficient or not proved but it is to be construed that evidence has been taken on record. Apart from all these things sub-rule (4) of rule 46A provide vast powers to the learned Commissioner (Appeals). He can exercise his discretion for enter any evidence even though the case of the assessee does not fall within the exceptions provided in clauses (a) to (d) of sub-rule (1), the moment learned Commissioner (Appeals) arrive at a conclusion that the evidence sought to be produced by the assessee is essential for the just decision of the appeal or for the substantial cause of justice, it is necessary to call such material on record. In that situation interdiction provided in sub-rules (1) and (2) would not come in its way. In view of the above we are of the opinion that learned Commissioner (Appeals) has wrongly refused to admit the additional evidence produced by the assessee and his order deserves to be set aside.
7. Since we are of the view that the order of the learned Commissioner (Appeals) deserves to be set aside then the next issue arises where to restore this issue for verification and re-adjudication, whether at the file of learned Commissioner (Appeals)- or the assessing officer.
Ordinarily when the order of the first appellate authority is set aside then issue is to be restored to his file for re-adjudication. But in the present case it is the assessing officer who has to examine the additional evidence produced by the assessee in support of its claim of explaining the cash credit. If we restore this issue to the file of learned Commissioner (Appeals) it will only increase the multiplicity of the litigation because learned first appellate authority would have to again call for a remand report from the assessing officer. Thus taking into consideration all these circumstances and the assessment year involved ie 1993-94 we are to the view that if we set aside this issue to the assessing officer for re-adjudication then ends of justice would meet. The ground No. I of the assessee's appeal is allowed.
8. The next issue relates to disallowance of Rs. 6,848. The assessee has claimed the deduction of this amount on the ground that it was incurred on travelling. It was contended before the assessing officer that assessee went to Delhi for discussion some new role but the expenses have not been claimed from the Producer. Therefore, such expenses are incurred for his professional work and the same be granted to the assessee. fhe learned Assessing Officer has disallowed the claim of assessee on the ground that no supporting detail is available.
learned Commissioner (Appeals) confirmed the disallowance by observing that this ground has not been pressed before him.
9. Before us learned Counsel for the assessee has taken a plea that this ground was pressed and the written submissions in this connection were filed on 5-7-1997 and 14-5-1999.
10. We have gone through the record carefully with the assistance of learned representatives and also gone through the written submissions of the assessee filed before the learned Commissioner (Appeals), which is available at page-73 of the paper book. From the record it is nowhere discernible that these expenses were incurred by the assessee on his travelling to Delhi. Simply accounting entries are available in the books, therefore, in our opinion learned Assessing Officer has rightly made the disallowance. This ground of appeal is rejected.
11. The next ground relates to disallowance of Rs. 2,197 out of car loan interest payment.
12. The assessee had paid a sum of Rs. 17,500 towards interest on the car loan. The learned Assessing Officer has disallowed 1/6th of such interest payment on the ground that possibility of the car being used for personal purposes cannot be ruled out. We do not find any error in this finding of the assessing officer. The possibility of personal user of car cannot be ruled out, therefore, assessing officer has rightly disallowed the claim of asscssee.