The appellate tribunal must allow additional evidence if deemed necessary for just disposal, and failure to record specific findings on such necessity constitutes legal error.

Order :

(Sanjay K. Agrawal, J.)

1. The present appeal preferred under Section 260A of the Income Tax Act, 1961 (for short, ‘the IT Act’) has been admitted for final hearing by formulating the following two substantial questions of law:-

“A. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in upholding the addition of Rs. 29,64,532/- by recording a finding which is perverse to the record?

B. Whether the ITAT was justified in declining the application for admission of additional evidence filed by the appellant under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 , by recording a finding which is perverse to the record?”

2. In order to answer the aforesaid questions of law, following facts are required to be noticed: -

3. The appellant / assessee firm, a builder / contractor, had e-filed its return of income for the assessment year 2016-17 on 21-2-2017 declaring an income of Rs.97,270/-. The case of the appellant / assessee firm was selected for scrutiny assessment through CASS (Computer Assisted Scrutiny Selection) for verifying the high amount of cash-in-hand shown in its balance sheet filed with the return of income filed under Section 139(4) of the IT Act dated 7-11-2016 and the assessee firm in reply to the notice under Section 142(1) of the IT Act dated 13-11-2018, filed certain documents namely, Bank Statement, Computation of Total Income, Cash Book as on 31-3-2016 (only one page), Balance Sheet as on 31-3-2016, Profit and Loss Account as on 31-3-2016 and Income Tax Return. Ultimately, the Assessing Officer on 13-12-2018, passed the order of assessment assessing the income of the assessee firm as Rs.31,90,190/-. Feeling aggrieved against the order of assessment, the appellant herein preferred appeal before the Commissioner of Income Tax (Appeals) and again before the CIT (Appeals), the appellant preferred day to day cash book for the financial year 2015-16 and other documents in shape of additional documents. However, the CIT (Appeals) by order dated 22-6-2023, dismissed the appeal preferred under Section 250 of the IT Act. Assailing the order passed by the CIT (Appeals), the appellant herein preferred appeal under Section 253 of the IT Act before the Income Tax Appellate Tribunal (ITAT) and also filed an application under Rule 29 of the Income-Tax (Appellate Tribunal) Rules, 1963 (for short, ‘the ITAT Rules’) and filed documents for admitting additional evidence on record, on 6-11-2023. The documents filed include day to day cash book for the financial year 2015-16, copy of cash flow statement / abstract of cash book for the financial year 2015-16 and cash book receipt side (i.e. debit entries) of financial year 2015-16. The learned ITAT dismissed the appeal on 5-12-2023 and also rejected the application filed under Rule 29 of the ITAT Rules finding no merit against which this appeal has been preferred by the assessee firm / appellant herein.

4. Mr. Apurv Goyal, learned counsel appearing for the appellant herein/assessee firm, would submit that the learned ITAT is absolutely unjustified in rejecting the application for admitting additional evidence on record and it ought to have considered the application for taking additional documents in accordance with Rule 29 of the ITAT Rules as it is pari materia to Order 41 Rule 27(b) of the CPC and those documents were also sought to be preferred before the CIT (Appeals) also, but both the authorities did not consider the assessee’s application for admitting additional documents on record in its proper perspective, as the said documents were necessary for just and proper disposal of appeal. He would rely upon the decision of the Supreme Court in the matter of Sanjay Kumar Singh v. State of Jharkhand , (2022) 7 SCC 247 in support of his contention and in that view of the matter, the appeal deserves to be allowed. Secondly, learned counsel prays for remitting the appeal itself before the ITAT with a direction to allow t