Tax, Circle-2(1), Panaji, Goa. … v. Bhadang, Jj

IN THE HIGH COURT OF BOMBAY AT GOATAX APPEAL NO. 47 OF 2012 M/s. Braganza Construction Pvt.Ltd., Braganza Apartments, Angud,Mapusa, Bardez, Goa. … Appellant V e r s u s The Asst. Commissioner of Income Tax, Circle-2(1), Panaji, Goa. … Respondent Mr. S. R. Rivankar and Mr. Rama Rivankar, Advocates for theAppellant. Ms. Susan Linhares, Standing Counsel for the Respondent. Coram :-M. S. SONAK & C. V. BHADANG, JJ. Date :6th December, 2019. ORAL JUDGMENT(Per M. S. Sonak, J) 1. Heard Mr. Rivankar, the learned Counsel for the appellant and Ms. Susan Linhares, the learned Standing Counsel for therespondent. 2.By order dated 22nd August, 2012, this appeal was admitted on the following substantial questions of law : “(i) Whether on the facts and in the circumstances ofthe case the ITAT was justified in holding that thesaid amount of Rs.80 lakhs is deemed to beunexplained expenditure under proviso, to section69C, of the IT Act, without considering theevidence/ material placed on record by the assessee,justifying that the said amount was expended byassessee from bank account ? (ii) Whether the ITAT has exceeded its jurisdictionby treating the said amount of Rs.80 lakhs underSection 69-C of the Act, when it was not the casespelt out by the assessing officer in show-cause noticeissued under Section 147 read with Section 148 ofthe Act ?” 3. After having heard the learned Counsel for the parties, we are satisfied that yet another substantial question of law isinvolved in this appeal. The same, according to us, ought to readas follows : (iii) Whether the ITAT in the facts andcircumstances of the present case, was required toconsider the application for production on recordmere additional evidence by the appellant in the formof cheques/demand drafts and other bankingdocuments in order to evidence the source ofpayments to the extent of approximately 39 lakhs,₹having regard to the provisions in Rule 29 of theIncome Tax (Appellate Tribunal) Rules, 1963 ? 4.The issue involved in the present appeal relates to deemedunexplained expenditure under the proviso to Section 69C of theIncome Tax Act, 1961, (IT Act, for short). The ITAT in theimpugned judgment and order has held that an amount of 80₹lakhs expended by the appellant was required to be treated asunexplained expenditure and, consequently, deemed income ofthe appellant-assessee. In the appeal before the ITAT, theappellant has produced on record certain documents by itsapplication dated 3rd May, 2011. The documents, inter alia,include reference to certain cheques, which, Mr. Rivankar, thelearned Counsel for the appellant, explains as the source of the amount and the source of the expenditure. Along with theapplication, even agreement dated 30th March, 2004 is produced. 5.From the impugned judgment and order, we find that allthis material has not even been considered. In particular, there isno discussion on whether such material could be admitted inevidence at the appellate stage or not and thereafter considered.Looking to the proviso of Rule 29 of the Income Tax (AppellateTribunal) Rules, 1963, we are satisfied that the aforesaidsubstantial question of law is indeed involved in this matter and isrequired to be decided. Further, we are satisfied that if theaforesaid substantial question of law, which we have now framed,is decided in favour of the appellant and against the revenue,then, the matter will have to be remanded to the ITAT and therewill be no occasion to decide the two substantial questions of lawframed at the time of admission of this appeal. 6.Ms. Linhares, the learned Standing Counsel for therespondent, has made her submissions on the aforesaid substantialquestion of law, without seeking any adjournment. 6.Ms. Linhares, the learned Standing Counsel for therespondent, has made her submissions on the aforesaid substantialquestion of law, without seeking any adjournment. 7.Ms. Linhares, the learned Standing Counsel submits thatthe documents which the appellant seek to produce before theITAT, were very much available at the stage when the assessmentwas made. However, the same were not produced before theAssessing Authority. She submits that all this casts a doubt uponsuch evidence. She also submits that the application made by theappellant does not satisfy the predicates of Rule 29 of the IncomeTax (Appellate Tribunal) Rules, 1963. 8.According to us, at this stage, we are really not required togo into the issue as to whether the production of such additionalevidence was to be allowed or not. From the impugned judgmentand order, what we find is that the ITAT has not even consideredthe appellant's application seeking leave to produce additionalevidence at the stage of appeal by it. This, according to us, amounts to failure to exercise jurisdiction, which, by virtue of theprovisions in Rule 29 of the Income Tax (Appellate Tribunal)Rules, 1963, was undoubtedly vested in the ITAT. Upon exerciseof such jurisdiction, thereafter, it is open to the ITAT to examinewhether the application made by the appellant indeed fulfils theparameters of Rule 29 of the Income Tax (Appellate Tribunal)Rules, 1963 or whether something is required to be said regardsthe documents that are sought to be produced at the appellatestage. However, consideration of this application was requiredand since the same has not been done, the impugned judgmentand order of the ITAT is required to be set aside and the matterremanded to the ITAT for consideration of the appellant'sapplication seeking leave to produce additional evidence beforethe ITAT. 9.In the aforesaid regard, reference is required to be made tothe provisions in Rule 29 of the Income Tax (Appellate Tribunal)Rules, 1963, which reads as follows : “Rule 29 - The parties to the appeal shall not beentitled to produce additional evidence either oral ordocumentary before the Tribunal, but if the Tribunalrequires any document to be produced or anywitness to be examined or any affidavit to be filed toenable it to pass orders or for any other substantialcause, or, if the income-tax authorities have decidedthe case without giving sufficient opportunity to theassessee to adduce evidence either on pointsspecified by them or not specified by them, theTribunal, for reasons to be recorded, may allow suchdocument to be produced or witness to be examinedor affidavit to be filed or may allow such evidence tobe adduced.” 10. From the aforesaid rule, it is quite clear that the ITAT doeshave the power to permit production of additional evidencebefore the Tribunal if the case for the same is indeed made out bythe parties. This means that the Tribunal is duty bound toconsider the application seeking leave to produce additionalevidence at the appellate stage. Since this has not been done, the substantial question of law, now framed, is required to beanswered in favour of the appellant and against the revenue. 11.Accordingly, without going into the merits of the mainmatter or without even going in the merits of the applicationmade by the appellant seeking leave to produce additionalevidence at the appellate stage, we, for the aforesaid reasons, setaside the impugned judgment and order by the ITAT and remandthe ITA No.03/PNJ/2011 to the file of the ITAT, Panaji, for freshadjudication. We direct that the ITAT considers the appellant'sapplication seeking leave to produce additional document, inaccordance with law and on its own merits. All contentions of allparties are specifically kept open. 12.Needless to add, that the ITAT shall afford opportunity ofhearing to both the parties and only thereafter decide the appealwhich we have now remanded to it. This appeal is accordinglydisposed off in the aforesaid terms. 13.There shall be no order as to costs. 12.Needless to add, that the ITAT shall afford opportunity ofhearing to both the parties and only thereafter decide the appealwhich we have now remanded to it. This appeal is accordinglydisposed off in the aforesaid terms. 13.There shall be no order as to costs. 14.The parties are directed to appear before the ITAT/ItsRegistry on 10th January, 2020 and produce authenticated copy ofthis order. 15.All concerned to act on the basis of the authenticated copyof this order. C. V. BHADANG, J. M. S. SONAK, J. arp/*