perverse, bad in law and invalid on the facts and circumstances of the case.

2. The Ld. CIT (A) has erred on facts and in law in presuming that the disallowance made by the Ld. Assessing Officer of the amount of interest paid by the Appellant to M/s Reliance Capital Ltd., was Rs 74,88,616/-

instead of Rs 22,46,585/- and ignoring that the difference between these two sums i.e. Rs 52,42,031/- was already allowed by the Ld. Assessing Officer by passing order of rectification under Section 154 of the Act (copy enclosed).

3. The Ld. CIT(A) has erred in law and on facts in (i) not appreciating the specific reasons given in submissions dated 25^th April, 2019 which prevented the appellant from producing the Chartered Accountant's (CA's) certificate confirming that payees of interest have shown interest income in their respective returns of income and paid tax on the same in accordance with the amended provisions of section 201 of the Act, and holding that 'sufficient time was granted to the Appellant, and (ii) not entertaining the evidence (i.e. CA's certificates u/s 201 (1) of the Act) on the ground that no application under Rule 46A is made though the requirements of Rule 46A were fully met and even remand report from the Assessing officer had been called and replied by the Appellant.

4. The Ld CIT (A) has erred on facts and in law in confirming disallowance of the aforesaid interest made by the Ld. Assessing Officer for non-deduction of TDS u/s 40(a)(ia) r.w.s 194A of the Act ignoring its second proviso and further ignoring that the Appellant has satisfied the conditions prescribed under the first proviso to sub-section (1) of section 201 of the Act, whereby a certificate from an independent accountant issued in prescribed FORM No. 26A under Rule 31ACB of the Income Tax Rules 1962 certifying that the recipient of interest i.e. M/s Reliance Capital Ltd. has disclosed and offered for income tax the aforesaid interest amount received from the Appellant while computing its taxable income and also paid the due income tax for the year under consideration.

5. The Ld. CIT(A) has erred on facts and in law in confirming disallowance of interest expense of Rs. 66,96,250/- paid by the Appellant to M/s Bajaj Finance Ltd., for non-deduction of TDS under section 40(a)(ia) r.w.s 194A of the Act by ignoring its second proviso and further ignoring that the Appellant has satisfied the conditions prescribed in the first proviso to sub-section (1) of section 201 of the Act, whereby a certificate from an independent accountant issued in prescribed FORM No. 26A under Rule 31ACB of the Income Tax Rules 1962 certifies that the

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recipient of interest i.e. M/s Bajaj Finance Ltd. has disclosed the interest income received from the Appellant as it taxable income and also paid tax on the same for the year under consideration.

6. The Ld. CIT(A) has erred on facts and in law in ignoring the loan approval letter dated 11.07.2012 of Bajaj Finance Ltd. wherein it is clearly stated that the loan against pledge of property is sanctioned to the Appellant for 'business use' and erroneously observing that the Appellant could not substantiate that the loan was taken for business purposes.

7. The Ld. CIT (A) has erred on facts and in law in presuming that the Appellant did not comply with Rule 46A of Income Tax Rules, 1962 in furnishing additional evidences and/or case laws being relied upon by him and this presumption in itself is contradictory since, if the additional evidence was not admissible, there was no need for seeking remand report of the Ld. Assessing Officer.

8. The Appellant craves leave to add, delete, modify or vary any of the grounds of appeal at any time during the pendency of the appeal or at the time of hearing."

(A.1) In this case, assessment order dated 13/12/2017 was passed by the Assessing Officer u/s 143(3) of Income Tax Act ('IT Act', for short) determining the total income at Rs.3,77,40,060/- as against the returned income of Rs.2,21,55,940/-. The additions made in the aforesaid assessment order included Rs.1,41,84,866/- made by the Assessing Officer by invoking section 40(a)(ia). This amount included Rs.74,88,616/- being interest on loan borrowed from M/s Reliance Capital Limited and Rs.66,96,250/- being interest on loan borrowed from M/s. Bajaj Finance Limited. The Assessing Officer noted that the assessee had not deducted tax at

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source (TDS) in respect of interest payments u/s 194A of IT Act. Invoking section 40(a)(ia), he made aforesaid addition totaling Rs.1,41,84,866/-, which was confirmed by the learned CIT(A) vide aforesaid impugned appellate order dated 16/07/2019 of learned CIT(A). The assessee filed this present appeal in Income Tax Appellate Tribunal ("ITAT" for short) against the aforesaid impugned appellate order of Ld. CIT(A). In the course of appellate proceedings in ITAT, paper book containing 229 pages was filed from the assessee's side containing the following particulars:

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(A.2) In addition copy of order of SMC Bench of ITAT, Delhi

Bench in the case of Zia Ur Rehman vs. Income-tax Officer [2018]

96 taxmann.com 482 (Delhi-Trib.) was also filed from the assessee's

side in the course of appellate proceedings in Income Tax Appellate

Tribunal.

(B) At the time of hearing before us, Mr. Ajay Vohra, Senior Counsel, appeared for the appellant assessee. The learned Senior Counsel for the assessee submitted that the aforesaid additions amounting to a total Rs.1,41,84,866/- deserved to be deleted having regard to certificates under first proviso to section 201(1) of IT Act, furnished by learned Chartered Accountants, wherein it had been confirmed that M/s. Reliance Capital Ltd. and M/s. Bajaj Finance Ltd. have offered the aforesaid amounts of Rs.74,88,616/- and Rs.66,96,250/- respectively; totaling aforesaid amount of

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Rs.1,41,84,866/- to tax. The learned Senior Counsel further drew our attention to the fact that the aforesaid certificates issued u/s 201(1) of IT Act were filed by the appellant, in the course of appellate proceedings before the Ld. CIT(A). He further submitted that these certificates issued by the learned Chartered Accountants u/s 201(1) of the IT Act could not have been furnished before the Assessing Officer during the assessment proceedings because these were not available with the assessee on 27^thDecember, 2017 when asked by the Assessing Officer; nor could these be made available by 29^thDecember, 2017 when the Assessing Officer asked to submit it. In this regard, the learned Senior Counsel for the appellant assessee drew our attention to the submissions made by the assessee before the learned CIT(A) in the course of appellate proceedings in the office of the learned CIT(A), as under, which have been reproduced by the learned CIT(A) at page 7 of the impugned appellate order:

"The Appellant could not submit these certificates as these were not available with the Appellant on 2 ' December 2017 when asked by the Ld. Assessing Officer nor could be made available by 29"'December 2017 when the Ld. Assessing Officer asked to submit it. The Appellant's bonafide for not being able to furnish certificates from the lenders M/s Balaji Finance Ltd. & M/s Reliance Capital Ltd. was primarily due to

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paucity of time coupled with the fact that the Appellant is an individual who is a non resident who predominantly stays abroad and the fact that the records were old and both the lending institutions are independent parties on which the Appellant cannot be exerting & administering unnecessary messure to issue certificates under given timelines. Both these institutions are also not under any statutory obligation to heed to the request of the Appellant. Regardless of above, Appellant was able to procure the certificates prescribed under the provisions of the Act read with rules and furnished the tame during the course of Appeal proceedings. The Appellant respectfully prays that due to an inadvertent delay for the reasons mentioned above in furnishing of these certificates there was no loss to the revenue. Tins clearly shows that the Appellant has fulfilled conditions of section 40(a) (m) after providing the CA certificate that the income is disclosed by both the payees (i.e. lender institutions) in their respective Return of Income and the conditions of Proviso to section 40(a) (ia) of the Act are met. Thus, the Appellant fulfills all the conditions prescribed under section 40(a) (ia) of the Act and is therefore entitled to the claim and its disallowance on mechanical grounds will be against the principles of natural justice and equity and result into undue hardship merely because requisite certificates could not be furnished during the course of assessment to the Ld. Assessing Officer."

(B.1) The learned Senior Counsel for the assessee further submitted that in view of the aforesaid facts and circumstances, the learned CIT(A) should have admitted aforesaid certificates issued by the learned Chartered Accountants u/s 201(1) of Income Tax Act; by way of additional evidences under Rule 46A of Income Tax Rules, 1962 ("IT Rules", for short). The learned Senior Counsel for the assessee drew our attention to the fact that the learned CIT(A) did not admit the aforesaid additional evidences merely on the ground

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that the assessee had not submitted any separate application under Rule 46A of IT Rules and, instead, these were filed as part of written submissions during the course of appellate proceedings before the learned CIT(A). The learned Senior Counsel for the assessee requested that direction may be given to admit the aforesaid additional evidences, in the nature of aforesaid certificates issued by the learned Chartered Accountants u/s 201(1) of the IT Act, which were filed by the assessee in the course of appellate proceedings in the office of the learned CIT(A); and the issues in dispute in the present appeal regarding allowability of interest expenses amounting to the aforesaid total of Rs.1,41,84,866/- may be restored to the file of the Assessing Officer with the direction to pass fresh order in accordance with law after providing reasonable opportunity to the assessee and after taking the aforesaid additional evidences into consideration. The learned Sr. DR for Revenue expressed no objection to this request; and he was in agreement that direction may be given to admit the aforesaid additional evidences, in the nature of certificates issued by the learned Chartered Accountant u/s 201(1) of the IT Act, filed by the assessee

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in the course of appellate proceedings in the office of the learned CIT(A) and the issues in dispute in the present appeal regarding allowability of interest expenses amounting to the aforesaid total of Rs.1,41,84,866/- may be restored to the file of the Assessing Officer with the direction to pass fresh order in accordance with law after providing reasonable opportunities to the assessee and after taking the aforesaid additional evidences into consideration. Having regard to the comment of the learned CIT(A) at paragraph (4.2.2) of the impugned appellate order, that business purpose of the interest payment of Rs.66,96,250/- to M/s Bajaj Finance Ltd. was not established; representatives of both sides; the learned Senior Counsel for the assessee as also the learned Sr. DR for Revenue, both were in agreement that the Assessing Officer may examine this aspect also, before finalizing fresh order.

(B.2.1) The learned Senior Counsel for the assessee made a specific prayer that the Assessing Officer may be directed to restrict the scope of fresh order to the specific issue of allowability of aforesaid amount of Rs.1,41,84,866/- after due verification. The

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learned Senior DR was in agreement with this request also and did not express any objection to it.

(C) We have heard both sides. We have perused the materials on record. We find that the assessee had submitted explanation before the learned CIT(A) as to why the aforesaid additional evidences by way of certificates issued by Chartered Accountant u/s 201(1) of IT Act could not be submitted by the assessee during the assessment proceedings. The assessee's submissions made before the learned CIT(A) in this regard have already been reproduced in the foregoing paragraph (B) of this order. There is no dispute regarding the facts claimed by the assessee in the aforesaid submissions. In view of the explanation furnished by the assessee as to why these additional evidences could not be submitted to the Assessing Officer in the course of assessment proceedings, the issue before us is whether these additional evidences deserved to be admitted by the learned CIT(A) having regard to provisions under Rule 46A of IT Rules. On perusal of Rule 46A(1) of IT Rules, we find that it mandates admission of additional evidence in the following circumstances:

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(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. In view of the aforesaid explanation submitted by the assessee in the course of appellate proceedings in the office of the learned CIT(A) already referred to in foregoing paragraph (B) of this order; we are satisfied that, the assessee was prevented by sufficient cause from producing the evidences which the assessee was called upon to produce by the Assessing Officer; and also, that the assessee was prevented by sufficient cause from producing before the Assessing Officer the evidences which were relevant to the grounds of appeal. Therefore, having regard to clauses (b) and (c) of Rule 46A(1) of IT Rules; we are of the view that the additional evidences deserved to be admitted by the Ld. CIT(A).

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(C.1) Even if the assessee did not file a separate application for admission of additional evidences under Rule 46A of Income Tax Rules; it was open to the learned CIT(A) to admit the additional evidences if the same were filed as part of the written submissions during the course of appellate proceedings before her because, there is nothing contained in Rule 46A of Income Tax Rules, 1962 to imply that filing of a separate application for admission of additional evidences was a mandatory condition for admission of additional evidences. Therefore, we are also of the view that the learned CIT(A) erred in refusing to admit additional evidence merely on the ground that a separate application seeking the admission of additional evidences was not filed by the assessee. (C.2) Moreover, if the learned CIT(A) was of the view [erroneously, as we have held in preceding paragraph (C.1) of this order] that filing of a separate application was a necessary requirement for admission of additional evidences under Rule 46A of Income Tax Rules; then she could and should have communicated this (erroneous) requirement to the assessee, which in her opinion was necessary to be fulfilled, and she should also

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have accorded reasonable opportunity to the appellant assessee to file a separate application for admission of additional evidences under Rule 46A of Income Tax Rules. Failure on the part of the learned CIT(A) to communicate this (erroneous) requirement, if in her opinion this was a necessary requirement, to the appellant assessee, and, to then instead refuse the admission of additional evidences; was unjust, unfair and harsh.

(C.2.1) In view of the foregoing, we order the admission of the aforesaid additional evidences in the nature of certificates issued by the learned Chartered Accountants under Rule 201(1) of IT Act, which were filed by the assessee in the course of appellate proceedings in the office of the learned CIT(A). Further, we restore the issue regarding allowability of interest expenses amounting to rupees aforesaid total amount of Rs.1,41,84,866/- to the file of the Assessing Officer with the direction to pass denovo order on the specific issue of allowability of aforesaid amount of Rs.1,41,84,866/-; after taking due cognizance of the aforesaid additional evidences and after providing reasonable opportunity to the assessee. We specifically clarify that the Assessing Officer will

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be at liberty to carry out due verification of the aforesaid additional evidences; and further, to examine the purpose of the interest payment of Rs.66,96,250/- to M/s Bajaj Finance Ltd. having regard to the assessee's business/profession; before finalizing fresh order, for coming to a conclusion about its allowability. All the grounds of appeal are treated as disposed of in accordance with aforesaid directions.

(D) For statistical purposes, this appeal is partly allowed. Order pronounced on 28/11/2022

Sd/- Sd/-

(SAKTIJIT DEY) (ANADEE NATH MISSHRA)

JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated:28/11/2022 Pk

Copy forwarded to:

1. Appellant

2. Respondent

3. CIT

4. CIT(Appeals)

5. DR: ITAT

ASSISTANT REGISTRAR

ITAT NEW DELHI

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