Section 249(4) provides that appeal shall not be admitted unless—
(a)
where a return of income has been filed by the assessee:
Ø
the
assessee has paid the tax due on the income returned by him on or before the
filing of appeal [Mandatory]
(b)
where no return of income has been filed by the assessee:
Ø
the
assessee has paid an amount equal to the amount of advance tax which was
payable by him.
In
case assessee has not filed its return, the Joint
Commissioner (Appeals) or the Commissioner (Appeals) on an application made
by the assessee, may, for any good or sufficient reason to be recorded in
writing, exempt him from payment of tax.
Text of Section 249(4)
[1][(4)
No appeal under this Chapter shall be admitted unless at the time of filing of
the appeal, —
(a) where a return has been filed by the assessee, the
assessee has paid the tax due on the income returned by him; or
(b) where no return has been filed by the assessee,
the assessee has paid an amount equal to the amount of advance tax which was
payable by him:
PROVIDED that, [2][in
a case falling under clause (b) and] on an application made by the
appellant in this behalf, the [3][***] [4][Joint
Commissioner (Appeals) or the] Commissioner (Appeals) may, for any good and
sufficient reason to be recorded in writing, exempt him from the operation of the
provisions of [5][that clause.”]]
KEY NOTE
1.
Inserted by the Taxation Laws (Amendment) Act, 1975, with effect from 01.10.1975.
2.
Inserted by the Direct Tax Laws (Amendment) Act, 1989, with effect from
01.04.1989.
3. Words “Deputy Commissioner (Appeals) or, as
the case may be, the” omitted by the Finance (No. 2) Act, 1998, with effect
from 01.10.1998. Earlier “Deputy Commissioner (Appeals)” was substituted for “Appellate
Assistant Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, with
effect from 01.04.1988 and “or, as the case may be, the” was inserted by the
Finance (No. 2) Act, 1977, with effect from 10.07.1978.
4.
Inserted by the Finance Act, 2023, with effect from 01.04.2023.
5. Substituted for “this sub-section” by the
Direct Tax Laws (Amendment) Act, 1989, with effect from 01.04.1989.
What
is contemplated by clause (a) of sub-section (4) of section 249 [Section
249(4)(a)]
What
is contemplated by clause (a) of sub-section (4) of section 249 is that when
there is an undisputed liability, the appeal filed by the assessee in respect
of the disputed liability cannot be admitted unless the assessee pays the
admitted liability. The object of clause (a) of sub-section (4) of section 249
is not to entertain the appeal where the assessee fails to pay the undisputed
tax liability.
Joint
Commissioner (Appeals) or the Commissioner (Appeals) empowered to grant
exemption from the payment of tax equal to the amount of advance tax [Proviso
to Section 249(4)]
On
going through the prescription of proviso to sub-section (4) of section 249 it
transpires that the Joint Commissioner (Appeals) or the
Commissioner (Appeals) has been empowered to grant exemption from the
payment of tax equal to the amount of advance tax which was payable by the
assessee in a situation where no return is filed by the assessee. It implies
that where the assessee did not file any return for the relevant year and still
the assessment was made, the assessee can file first appeal even without the
payment of tax provided he satisfies the Joint Commissioner (Appeals) or the Commissioner
(Appeals) for the reasons of non-payment of tax. The power of the first
appellate authority as per the directive of proviso is not to accept the
delayed payment of such tax, but to exempt the payment of tax altogether. The
operation of proviso is restricted only to clause (b ) and is not applicable to
clause (a) which deals with a situation in which return was filed by the
assessee. Thus in such a situation where the return was originally filed by the
assessee, the Joint Commissioner (Appeals) or the Commissioner (Appeals) has no
power to grant exemption from the making of payment of tax due on the income
returned. The requirement of payment of tax in a case covered under clause (a)
is to be examined at the time of admission of first appeal.
Undisputed tax to be paid before filing appeal
[Section 249(4)]
Before
filing an appeal, undisputed tax, if any, remaining unpaid should first be
paid. An appeal is not as a matter of fact admissible if any tax remains unpaid.
Disqualification to file an appeal
(a) where a return has been filed
by the assessee, the assessee has not paid the tax due on the income returned
by him;
(b) where no return has been filed
by the assessee, the assessee has not paid an amount equal to the amount of
advance tax which was payable by him.
As per section 249(4) unless and
until, assessee has paid income tax due on income returned by him, no appeal
under Chapter XX will be admitted and statute does not give any discretion to
appellate authority to entertain an appeal or to extend time for paying self
assessment tax, except in respect of cases falling under section 249(4)(b) in
terms of proviso under said section
The appeal filed by the assessee
against certain addition was not considered on merits and was dismissed by the
Commissioner (Appeals) on ground that assessee had not paid self assessment tax
which assessee had admitted before appellate authority.
On appeal, the assessee submitted
that Commissioner (Appeals) ought to have granted time to it to pay self
assessment tax. However, when appeal was heard, additional grounds were raised
by assessee regarding wrong computation of income. The Tribunal upon
considering grounds of appeal raised by assessee at first instance as well as
additional grounds, rejected same by holding that self assessment tax was
admittedly not paid and there was no satisfactory evidence to substantiate
assessee's plea that assessee had wrongly computed income. On appeal.
Held : Section 249(4) provides
that, unless and until, assessee has paid income tax due on income returned by
him, no appeal under Chapter XX will be admitted and the Statute does not give
any discretion to appellate authority to entertain an appeal nor extend time
for paying self assessment tax, except in respect of cases falling under clause
(b) of section 249(4) in terms of proviso under the said section.
Though such a ground was raised in
the appeal memorandum filed before the Tribunal, the assessee appears to have
been more interested in canvassing the additional ground with regard to
offering a sum of Rs. 82.37 crores relating to inbuilt revenue which according
to the assessee was an inadvertent income. The Tribunal had rightly held that
there was no satisfactory evidence placed before it to substantiate assessee's
plea that they wrongly computed admitted income. Thus, no substantial question
of law owner for consideration. [In favour of revenue] (Related Assessment year
: 2012-13) – [Pesco Beam Environmental Solutions (P) Ltd. v. DCIT (2020) 275
Taxman 211 : 119 taxmann.com 123 (Mad.)]
In terms of section 249(4)(a), stipulation as to
payment of tax ante filing of first appeal is only directory and not mandatory
and, therefore, where appeal is filed without payment of tax but subsequently
required amount of tax is paid, appeal shall be admitted on making payment of
tax and taken up for hearing on merits
The
Karnataka High Court in the case of CIT v. K. Satish Kumar Singh (2012) 209
Taxman 502 : 19 taxmann.com 154 (Karn.) and in the case of PCIT v. Abdul
Zahid M (2017) 394 ITR 727 : 88 taxmann.com 592 (Karn.) took the
view that if admitted tax on returned income is paid then the appeal has to be
admitted for adjudication by the Commissioner (Appeals) on merits. The Hon’ble
Mumbai ITAT in the case of Bhumiraj Constructions v. Addl. CIT (2011) 131
ITD 406 : 11 taxmann.com 333 (ITAT Mumbai) had an occasion to deal with a
case where an appeal by the Assessee was dismissed for non-payment of tax due
on the income declared in the return of income. The Tribunal firstly observed
that there is a distinction between a mandatory and directory provision. If the
non-compliance with the requirement of law exposes the assessee to the penal
provision, then it is mandatory, but if no penal consequences follow on
non-fulfilment of the requirement, then usually it is a directory provision.
Omission to comply with a mandatory requirement renders the action void,
whereas omission to do the directory requirement makes it only defective or
irregular. On the removal of such defect, the irregularity stands removed and
the status of validity is attached.
The
Tribunal examined the objective behind section 249(4) and observed that the
same is to ensure the payment of tax on income returned before the admission of
appeal. If such payment after the filing of appeal but before it is taken up
for disposal validates the defective appeal, then there is no reason as to why
the doors of justice be closed on a poor assessee who could manage to make the
payment of tax at a later date. The stipulation as to the payment of tax ante
the filing of first appeal is only directory and not mandatory. Whereas the
payment of such tax is mandatory but the requirement of paying such tax before
filing appeal is only directory.
When
the defect in the appeal, being the non-payment of such tax, is removed, the
earlier defective appeal becomes valid. It implies that all the consequences
which follow on the removal of defect are that the validity is attached to the
appeal from the date when it was originally filed and not when the defect is
removed. The Tribunal ultimately held that if tax due on income returned is
paid even after disposal of the appeal by the Commissioner (Appeals), if such
payment is made the defect in the appeal due to non-compliance of a directory
requirement of paying such tax before the filing of the appeal, stood removed.
Ex-consequential the appeal should have been revived by the first appellate
authority.
In
the present case, the taxes due on returned income is claimed to has been paid.
Therefore the appeal by the Assessee against the order of assessment should be
admitted and adjudicated by the Commissioner (Appeals) on merits. In the
decision referred to above, it has been held that if the admitted taxes are
paid at a later point of time, then the appeal of the assessee should be
considered as properly instituted and should be heard and decided by the
Commissioner (Appeals) on merits. In view of aforesaid, the order of the
Commissioner (Appeals) is set aside and the Commissioner (Appeals) is directed
to decide the appeal on merits, subject to verification of payment of taxes
(excluding interest) due on the returned income. In the result, the appeal by
the assessee is allowed for statistical purposes. [In favour of assessee/Matter
remanded] (Related Assessment year : 2006-07) - [Annapoorneshwari Investment
v. DCIT(C) [2019] 177 ITD 717 : 107 taxmann.com 417 (ITAT Bangalore)]
Admitted tax as per return of
income – Requirement of paying admitted tax before filing appeal is directory –
When defect is removed, earlier defective appeal becomes valid. Accordingly,
the matter was remanded to Commissioner
(Appeals)
For
relevant year, Assessing Officer completed assessment under section 143(3)
making certain additions to assessee’s income. Assessee filed appeal before
Commissioner (Appeals). Commissioner (Appeals) noticed that assessee had not
paid taxes on returned income and therefore in view of provisions of section 249(4)(a),
appeal filed by assessee was dismissed in limine as unadmitted. In terms of
sub-section (4) of section 249, payment of tax is mandatory but requirement of
paying such tax before filing appeal is only directory. Tribunal held that
payment of admitted tax as per return of income before filing of an appeal is
directory, therefore, when defect in appeal, being non-payment of such tax, is
removed, earlier defective appeal becomes valid. Accordingly, the matter was
remanded to Commissioner (Appeals) for disposal of appeal on merits, subject to
verification of payment of taxes due by assessee on returned income. [In favour
of assessee/Matter remanded] (Related Assessment Year : 2013-14) – [Sushila
Devi Malu (Smt.) v. ITO (2019) 174 ITD 627 (ITAT Bangalore)]
Revised return filed not in compliance with
requirements of section 139(5) was non-est and same could not constitute a
return contemplated in section 249(4)(a)
The
assessee was an individual in whose case a search action under section 132(1)
was carried out. For the assessment year under consideration, assessee had not
filed its regular return under section 139(1) and it was only after a notice
under section 153A was issued, assessee filed return of income declaring the
total income at Rs. 1.55 crores. Subsequently, the assessee filed a revised
return declaring an income of Rs. 6.32 crores. In the assessment finalized
under section 143(3) read with section 153A the Assessing Officer determind the
total income at Rs. 7.23 crores after making certain additions/disallowances on
account of low withdrawals, unexplained credits and rent from property, etc.
The
assessee challenged the additions in appeal before the Commissioner (Appeals).
The Commissioner (Appeals) referred to the provisions of section249(4), which
prescribed that no appeal would be admitted unless at the time of filing of
appeal, assessee had paid the tax due on the income returned by him. The
Commissioner (Appeals) referred to clause (a) of section 249(4) of the Act and
noted that the assessee had not paid the tax on the income declared in the
revised return and, therefore, the appeal was dismissed as unadmitted. On
Second appeal:
Where
assessee filed revised return not in compliance with requirements of section
139(5), same was non-est and could not constitute a return contemplated in
section 249(4)(a). [In favour of assessee] (Related Assessment years : 2008-09
and 2009-10) – [Mohammed Farooque Sarang v. DCIT(C) [2017] 164 ITD 573 : 81
taxmann.com 374 (ITAT Mumbai)]
The
revenue pointed out that at the time of filing of appeal before the
Commissioner (Appeals), admittedly the tax on the income returned was not paid.
Under these circumstances, the rigors of section249(4)(a) clearly come into
operation and the appeal before the Commissioner (Appeals) deserved to be
treated as unadmitted. It is also axiomatic that so far as the situation
contemplated in clause (a) of section249(4) of the Act is concerned, the
Commissioner (Appeals) is not vested with any power to waive payment of the
admitted tax and entertain the appeal in contrast to the situation contemplated
in clause (b) to section 249(4) of the Act. However, the defense put up by the
assessee is that the non-payment of admitted tax on returned income is a
curable defect and once such a defect has been cured, there is enough
justification for the appeal being admitted by the Commissioner (Appeals).
The
co-ordinate Bench in the case of Smt. Banu Begum, v. DCIT (2012) 22
taxmann.com 235 (ITAT Hyderabad) has observed that non-payment of admitted
tax is a defect which can be cured by payment of tax. In fact, the Karnataka
High Court in the case of CIT v. K. Satish Kumar Singh (2012) 209 Taxman 502
: 19 taxmann.com 154 (Karn.) opined that even after the dismissal of appeal
by the Commissioner (Appeals) for non-payment of admitted tax, if assessee pays
the admitted tax, even then the Commissioner (Appeals) may recall the order
dismissing the appeal and consider the appeal on its merits. In view of the
aforesaid proposition, in the present case too, since the assessee has claimed
that it has paid tax on the returned income before passing of order by the Commissioner
(Appeals), it will be in the fitness of things that the matter is remitted back
to the file of Commissioner (Appeals) to be considered afresh on merits. In the
result, assessee's appeal is allowed for statistical purposes. – [Mohammed
Farooque Sarang v. DCIT(C) [2017] 164 ITD 573 : 81
taxmann.com 374 (ITAT Mumbai)]
Upholds seized cash with Revenue as tax payment for
Commissioner (Appeals) admission under section 249(4) - Commissioner (Appeals)
denied hearing of appeal on plea that assessee had failed to pay due tax on
returned income and had defaulted in terms of provisions of section 249(4)(a),
since amount that had been seized by revenue from assessee was far in excess of
amount of tax payable on returned income, assessee could not have been denied
hearing
Authorised
officer conducted a search under section 132 upon assessee and seized an amount
of Rs. 4.60 lakhs from his possession. Thereafter assessee filed return of
income showing due tax payable on returned income as Rs. 1.61 lakhs. He stated
that amount seized during search at Rs. 4.60 lakhs should be treated as paid.
Assessing Officer processed under section 143(1) return of income filed by
assessee and issued intimation creating a demand of Rs. 2.15 lakhs. He did not
adjust amount of tax payable on returned income against amount that had been
seized from assessee. Commissioner (Appeals) denied hearing of appeal on plea
that assessee had failed to pay due tax on returned income and had defaulted in
terms of provisions of section 249(4)(a). In instant case, amount of Rs. 4.60
lakh which was available with revenue was far in excess of amount of tax
payable in terms of returned income. Assessee had duly complied with
requirements of section 249(4)(a) and he could not have been denied hearing.
[In favour of assessee] (Related Assessment year : 1996-97) – [CIT v. Pramod
Kumar Dang (2014) 361 ITR 137 : 265 CTR 1 : 42 taxmann.com 301 : [TS-58-HC-2014(DEL)]
(Del.)]
Defect arising due to non-compliance of section 249(4)
is a curable one
Commissioner
(Appeals) having noticed that assessee had not paid admitted tax, invoked
provisions of sub-section (4) of section 249 and dismissed appeal in limine as
non-maintainable. Later on, assessee filed a petition before Commissioner
(Appeals) informing that admitted tax for block period had been paid and prayed
for restoration of appeal and for disposing of same on merits. Commissioner
(Appeals) rejected petition holding that there is no provision under Act to
restore appeal which was dismissed for violation of provisions of section
249(4). Defect arising due to non-compliance of section 249(4) is a curable
one. Since assessee was not having sufficient funds at relevant time for
compliance of section 249(4), there existed sufficient reasons for not filing a
valid appeal before Commissioner (Appeals) and, therefore, matter required to
be restored for adjudication on merits. [In favour of assessee] (Block period
1996-97 to 2002-03) – [T. Kishan v. ACIT(C) (2013) 56 SOT 114 : (2012) 23
taxmann.com 383 (ITAT Hyderabad)]
If the appeal is filed without the payment of tax on
returned income but subsequently the required amount of tax is paid, the appeal
shall be admitted on payment of tax and appeal has to be decided on merit
Objective
behind section 249(4) is to ensure payment of tax on income returned before
admission of appeal and if such payment after filing of appeal but before it is
taken up for disposal validates defective appeal, then there is no reason as to
why doors of justice be closed on a poor assessee who, could manage to make
payment of tax at a later date. Whereas payment of such tax is mandatory but
requirement of paying such tax before filing appeal is only directory. When
defect in appeal, being non-payment of such tax, is removed, earlier defective
appeal becomes valid. Once one calls an appeal as valid, it implicit that it is
not time barred and it implies that all consequences which follow on removal of
defect are that validity is attached to appeal from date when it was originally
filed and not when defect is removed. (Related Assessment year : 2006-07) - [Bhumiraj
Constructions v. Addl. CIT (2011) 135 TTJ 357 : 131 ITD 406 : 49 DTR 195 : 11
taxmann.com 333 (ITAT Mumbai)]
Each
heading in Chapter XX deals with a different subject-matter and one cannot read
words in Chapter XX-A into words used in Chapter XX-B - Therefore, provision of
section 249(4)(a), which insists on assessee satisfying a condition of paying
admitted tax as condition precedent to his filing of appeal, cannot be read
into section 253(1)(b) as it stood prior to 01.10.1998
Chapter
XX deals with ‘Appeals and revisions’. Chapter XX is divided into headings ‘A’
to ‘F’. Section 246 enumerates a list of orders of the Assessing Officer
against which appeals(s) would lie. In that list of orders, an appeal to the
Tribunal under section 253(1) is not mentioned. This is a very important
indicia to show that each heading in Chapter XX deals with a different
subject-matter and one cannot read the words in Chapter XX-A into the words
used in Chapter XX-B. Chapter XX-A deals with appeals to the Deputy
Commissioner and the Commissioner (Appeals), whereas Chapter XX-B deals with
appeals to the Tribunal. Similarly, reference to the High Court lies under
Chapter XX-C. Thus, each heading is a standalone item and, therefore, one
cannot read the provision of section 249(4)(a ) into section 253(1)(b). If the
argument of the department was to be accepted, then, in that event, no appeal
or reference could lie even to the High Court without complying with the
provisions of section 249(4)(a). This cannot be the scheme of Chapter XX.
Section 253(1)(b) refers to an assessee filing an appeal to the Tribunal
against an order passed by an Assessing Officer under section 158BC(c). Clause
(b) came to be inserted into section 253(1) by the Finance Act, 1995 and that
too with effect from 01.07.1995. The very concept of the block assessment came
to be inserted in the Act vide the Finance Act, 1995, with effect from 01.07.1995,
whereas the words ‘this Chapter’ in section 249(4) came to be inserted vide
Taxation Laws (Amendment) Act, 1975, with effect from 01.10.1975. This is one
more reason to confine the expression ‘this Chapter’ in section 249(4) to
Chapter XX-A without it being extended to section 253(1)(b) which is there in
Chapter XX-B. Further, under the scheme of Chapter XX, no appeal under section 249(4)(a)
in Chapter XX-A was admissible without the assessee having paid the admitted
tax due on the income returned by him. Once section 249(4)(a) is treated as a
mandatory condition for filing an appeal before the Commissioner (Appeals) and
once that condition stands satisfied at the time of filing an appeal to the
Commissioner (Appeals), then there is no necessity for the assessee to once
again pay the admitted tax due as a condition precedent to his filing the
appeal before the Appellate Tribunal under section 253(1)(b). Lastly, one must
keep in mind the principle that the doctrine of incorporation cannot be invoked
by implication. A provision which insists on the assessee satisfying a
condition of paying the admitted tax as a condition precedent to his filing of
the appeal under section 253(1)(b) is a disenabling provision. Such disenabling
provisions must be clearly spelt out by the Legislature while enacting the
Statute. The Courts have to be careful in reading into the Act such disenabling
provisions, as that would tantamount to judicial legislation which the Courts
must eschew. It is for the Parliament to specifically say that no appeal shall
be filed or admitted or would be maintainable without the assessee(s) paying
the admitted tax due. That has been done only in the case of an appeal under
section 249(4)(a). One cannot read such a disenabling provision into section
253(1)(b). Therefore, there was no merit in the revenue’s appeal and the same
was to be dismissed. [In favour of assessee] (Block period 1986-87 to 14.09.1995)
–[CIT, Indore v. Pawan Kumar Laddha (2010) 324 ITR 324 : 231 CTR 219
: 190 Taxman 169 (SC)]
“Scope of Tax” -
Expression ‘Tax’ does not include interest for purpose of section 249(4)
On
the literal reading of section 249(4), the language used by the legislature is
has paid tax dues. As per the definition in section 2(43), tax does not include
interest which is independently referred to in section 2(28A). - When the
legislature itself has used two different expressions and defined them
separately, then whilst considering the language of a section, the court
is bound to look at the definitions in the legislation for the purpose of
interpreting and construing the expressions and words under the Act. - The
object being to avoid conflict and have a harmonious interpretation, unless the
context otherwise requires. (4). Therefore, the expression “tax” does not
include interest for the purpose of section 249(4). - [CIT v. Manoj Kumar
Beriwal (2009) 316 ITR 218 : 217 CTR 407 (Bom.)]
Tax includes only “Admitted/Undisputed” Tax, Section
249(4) not applicable when liability to pay tax was disputed
Where
petitioner assessee disputed liability on ground that he could not have been
assessed as HUF as on date of filing return and on date of assessment there was
no HUF in existence, right guaranteed to petitioner to prefer an appeal could
not be taken away under section 249(4) by taking view that petitioner had
failed to pay tax due on income shown in return filed.
What is contemplated by
clause (a) of sub-section (4) of section 249 is that when there is an
undisputed liability, the appeal filed by the assessee in respect of the
disputed liability cannot be admitted unless the assessee pays the admitted
liability. The object of clause (a) of sub-section (4) of section 249 is not to
entertain the appeal where the assessee fails to pay the undisputed tax
liability. In the instant case, it was the case of the petitioner that the
intimations issued were wholly illegal and on that basis the petitioner sought
for rectification of the intimations issued by filing applications under
section 154 and since the first respondent failed to allow the applications
filed by the petitioner or rectify the intimations issued, the petitioner had
preferred appeals against the intimations issued and the orders passed under
section 154. Therefore, it was clear that though the petitioner had filed the
returns, the petitioner had disputed his liability to be assessed as HUF and
pay the tax liability imposed on him. Under these circumstances, the view taken
by the second respondent that the appeals filed by the petitioner could not be
admitted since the petitioner had failed to pay the tax due on income shown by
him in the return filed by him was erroneous in law. Sub-section (4) of section
249 has to be construed in the backdrop of the right to appeal provided to an
assessee under section 246 . Under these circumstances, while interpreting
sub-section (4) of section 249 the court will have to keep in mind the object
of sub-section (4) of section 249 and also the right to prefer an appeal
guaranteed to an assessee. In that view of the matter, sub-section (4) has to
be liberally construed to serve the object of the right provided to an
assessee, and not with a view to deprive the right provided to an assessee to
prefer an appeal. When the very liability was disputed by the petitioner on the
ground that the petitioner could not have been assessed as an HUF as on the
date of filing of the return and on the date of the assessment there was no HUF
in existence, the right guaranteed to the petitioner to prefer an appeal could
not be deprived by taking the view that the petitioner had failed to pay the
tax due on the income shown in the return filed. Therefore, the order passed by
the second respondent was liable to be quashed. (Related Assessment years :
1991-92 and 1992-93) - [T. Govindappa Shetty & Others v. ITO (1998) 231
ITR 892 (Karn.)]
Assessee’s
appeal was held not to be maintainable where assessee failed to pay tax due on
returned income by the date of filing appeal for the CIT(A) had not the power
to condone that lapse in view of applicability of section 249(4) (a) on facts
of assessee’s case
A
search of the assessee’s premises was conducted on 24.09.1987. The assessee
filed his return of income for the assessment year 1988-89 on 21.03.1991. The
Assessing Officer completed the assessment under section 143 on 31.12.1991 by
making certain additions. The assessee filed appeal before Commissioner on
30.11.1992, objecting to the various additions. The Commissioner (Appeals)
noted that the assessee had not paid the tax due on returned income at the time
of filing the appeal and that under section 249(4)(a) as amended with effect
from 01.04.1989, the appeal could not be admitted because of that lapse. The
assessee contended that assessee’s lapse in not paying the tax on the returned
income was bona fide and it should be condoned. The Commissioner (Appeals),
rejecting the assessee’s contention, declined to entertain the appeal, holding
that with effect from 01.04.1989, the Commissioner (Appeals) had no power to
condone that lapse.
On
second appeal, the assessee contended that the Commissioner (Appeals) ought to
have condoned the lapse on the ground that assessment proceedings could be
presumed to have started with the search conducted on 24.09.1987, i.e., much
before the amended provisions of section 249(4)(a) came into effect on
01.04.1989.
Held
: There was no dispute that the assessee had not paid tax on the returned
income before filing of the appeal on 03.02.1992, nor any advance tax or tax on
account of self-assessment had been paid by the assessee. As such the
provisions of section 249(4)(a) were clearly attracted in the case of the
assessee. Being a creature of the Act, the Commissioner (Appeals) has to
function within the parameters of the statute and as such has no inherent
powers in the matter of entertaining an appeal. He does not have power to
transgress the limits placed by the statute. Under the circumstance the
Commissioner (Appeals) was justified in not entertaining the appeal filed by
the assessee. In the instant case, the return of income was filed on 21.03.1991
and the assessment proceedings started with the issue of notice under section
143(2) thereafter, that is much after 01.04.1989, when the amended provisions
of section 249(4)(a) came into effect. The assessee contention that the
assessment proceedings started with the search of the assessee’s premises on
24.09.1987 could not be accepted because such an interpretation would produce a
manifestly absurd and unjust result which could never have been intended by the
Legislature. The Commissioner (Appeals) was, therefore, justified in not
entertaining this appeal. [In favour of revenue] - [Khushmanlal Hiralal v.
CIT (1996) 57 ITD 531 : 56 TTJ 62 (ITAT Ahmedabad)]
