GE Energy Parts Inc vs. ADIT (ITAT Delhi)

Rule 29 of the ITAT Rules: Entire law on admission of additional evidence explained

The department filed an application under Rule 29 of the ITAT Rules requesting permission to produce before the Tribunal the “LinkedIn profiles” of the assessee’s employees and a whistleblower petition filed in the High Court in support of the contention that the assessee had a permanent establishment in India. The assessee opposed the admission of the said evidence on various grounds. HELD by the Tribunal allowing production of the LinkedIn profiles but rejecting the whistleblower petition:

(i) S. 254(1) provides that the Tribunal may “pass such orders therein as it thinks fit”. S. 255 (6) confers upon the Tribunal all the powers vested in it which are vested in the income-tax authorities with reference to s. 131. S. 131 confers powers regarding discovery, production of evidence etc. Rule 29 of the ITAT Rules empowers the Tribunal to admit additional evidence if it comes to the conclusion that a particular document would be necessary for consideration to enable it to pas orders or for any other substantial cause. The document can be brought to the notice of Tribunal by either party. The Tribunal is final fact finding body and, therefore, the powers have been conferred on it u/s 131 and Rule 29 to enable it to record a factual finding after considering the entire evidence. At the time of admission of additional evidence the Tribunal is required to examine whether prima facie the evidence is relevant to the facts in issue or not. As per s. 3 of the Evidence Act, one fact is set to be relevant to another when the one is connected with the other in any of the ways referred to in the provisions of Evidence Act relating to the relevancy of facts. The fact in issue u/s 3 of the Evidence Act means and includes any fact from which either by itself or in connection with other facts the existence/ non-existence nature or extent of any right, liability or possibility asserted or denied in any suit or proceedings necessarily follows. Section 5 of the Evidence Act deals with the relevancy of facts and provides that evidence may be given in any suit or proceeding of the acceptance or non-acceptance of every fact in issue and of such other facts as are herein declared to be relevant and of no others;

(ii) On the issue regarding existence of a PE, a factual finding is required to be recorded on the basis of evidence on record and, if the Tribunal considers that additional evidence is relevant to the fact in issue, which is existence or not of PE, then in order to advance the cause of justice, the additional evidence should be admitted. In order to enable the Tribunal to decide disputes before it in a lawful, fair and judicious manner, it necessarily is required to look into and consider such and other material having a direct nexus and bearing on the subject matter of the appeal. Merely because the Linkedin profiles was available in public domain and was not referred to by the AO the department cannot be prevented from bringing that information on record so as to arrive at the correct factual finding on the issue regarding PE. This cannot be said to be a case of inordinate delay because the AO had drawn an adverse inference on account of non-furnishing of information by assessee and when assessee is trying to take mileage out of its conduct, the department is bringing on record additional evidence in the form of linkedin profile of employees to demonstrate that the conclusion drawn by department was fully justified. All the cases relied upon by the assessee & CIT(DR) are with reference to additional evidence brought before the Tribunal for the first time by assessee. But none of the cases deals with a situation where the assessee withholds some information from the department and then claims that information relevant to the facts in issue should not be admitted. The inordinate delay theory cannot be invoked in a case where cause of justice will be defeated rather than being sub-served;

(iii) Rule 46A(4) also gives wide powers to the CIT(A) to entertain fresh evidence for sub-serving the cause of justice. The assessee cannot be permitted to first scuttle the investigations/ inquiries by not furnishing the necessary information and then claim benefit out of the same. At the end of the day it is the determination of correct taxability of assessee, which should guide the proper course of action. There is no gain saying that pitted against the technicalities and cause of justice, cause of justice should prevail. It is true that either party cannot make out a new case by implanting additional evidence but where the additional evidence only supplements the information on the basis of which a factual finding is to be arrived at and not supplant the information, then the Tribunal can and should look into those details. It would be travesty of justice to ignore the additional evidence at admission stage only before arriving at a correct finding of fact. As a matter of fact assessee should have no complaints in getting the relevant information being brought on record from the appreciation of which correct factual finding can be arrived at. In the present case the Linkedin profiles sought to be filed by the department has considerable bearing on the subject matter of appeal and therefore should be admitted by the Tribunal. The assessee will be free to rebut the information contained in the Linkedin profiles by bringing on record contrary facts to dislodge the claims made in the Linkedin profiles.