Commissioner of Income Tax vs United Towers (I.) P. Ltd.

The matter has been called out twice but there is no appearance on behalf of the assessed. On the last two dates of hearing, the assessed was represented by its chief engineer.

The assessed has filed a reply dated October 16, 2006, wherein it is stated that the appeal may kindly be decided on the merits and that the assessed would abide by the decision of the court. The reply has been filed by Sh. P.S. Gupta, one of the directors of the assessed-company and it is supported by his affidavit.

We have heard learned Counsel for the Revenue and are of the opinion that the following substantial questions of law arise for consideration:

(1) Whether the Income Tax Appellate Tribunal was correct in law in holding that in terms of Rule 46A(4) of the Income Tax Rules, 1962, the Commissioner of Income Tax (Appeals) could take evidence on record without giving an opportunity to the Assessing Officer to deal with the same?

(2) Whether the Income Tax Appellate Tribunal was correct in law in deleting the addition of Rs. 7,92,000 made by the Assessing Officer by disallowing the expenditure in respect of rent paid by the assessed?.

Filing of paper book is dispensed with.

We have heard learned Counsel for the Revenue and are of the view that the Income Tax Appellate Tribunal was in error in holding that the Commissioner of Income Tax (Appeals) "was not under any statutory obligation to give any opportunity to the Assessing Officer with respect to such evidence or material having regard to the provisions of Sub-rule (4) to Rule 46A" after having called for evidence and material so as to enable herself to pass an order.

The principles of natural justice require that before any material is used against a party, it should be put to him. Rule 46A(4) of the Income Tax Rules, 1962, does not specifically exclude the principles of natural justice and, Therefore, these principles are necessarily to be read into the provision of the Rules.

Consequently, the Commissioner (Appeals) was obliged to put the material to the assessed before making any decision adverse to him on the basis of that material. Since that has not been done, we are of the view that the appeal requires to be allowed accordingly. The first question is, Therefore, answered in the negative, in favor of the Revenue and against the assessed.

Since we have decided the first question in the above manner, the second question has become academic in nature.

We, Therefore, set aside the impugned order and remand the file to the Commissioner (Appeals) to be decided in accordance with law and after giving an opportunity to the assessed to respond to the evidence taken into consideration by the Commissioner (Appeals). The appeal is disposed of accordingly.