Fatehsinh Mohansinh Chauhan, SILVASSA V. The ACIT.,Cent.Circle-2, Surat

ITA 2730/AHD/2009

• Counselvise Citation: 273020514 RSA 2009
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 01-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AFAQ SAIYED
• Keywords: Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE SHRI G. D. AGARWAL, VP AND SHRI BHAVNESH SA INI, JM) ITA NO.2730/AHD/2009 A. Y.: 2007-08 FATEHSINH MOHANSINH CHAUHAN, HAVELI, SWAMINARAYAN MARG, SILVASA 396 230, U. T. OF DADRA & NAGAR HAVELI, VS THE A. C. I. T., CENTRAL CIRCLE-2, ROOM NO.504, AAYAKAR BHAVAN, SURAT -1 PA NO. ABPPC 6997 C (APPELLANT) (RESPONDENT) APPELLANT BY SHRI AFAQ SAIYED, AR RESPONDENT BY SHRI VINOD TANWANI, SR. DR DATE OF HEARING: 07-09-2011 DATE OF PRONOUNCEMENT: 09-09-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II , AHMEDABAD DATED 07-08-2009, FOR THE ASSESSMENT YEAR 2007-08, ON TH E FOLLOWING GROUNDS: 01. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCE OF THE CASE AND LAW, THE LEARNED COMMISSIONER TAX (APPEALS) HAS ERRED IN NOT ADMITTING THE APPEAL FILED BY THE APPE LLANT SOLELY BASED ON THE REASON THAT THE APPELLANT HAS N OT PAID THE TAX DUE ON THE RETURNED INCOME AT THE TIME OF F ILING OF APPEAL. THE LEARNED COMMISSIONER OF INCOME TAX ITA NO. 2730/AHD/2009 FATEHSINH MOHANSINH CHAUHAN VS ACIT, CC-2, SURAT 2 (APPEALS) MAY KINDLY BE DIRECTED TO ADMIT THE APPEA L AND ADJUDICATE THE SAME AS PER LAW. 2. ALTERNATIVELY AND WITHOUT PREJUDICE TO THE ABOVE ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT TH E APPELLANT HAS SUBSEQUENTLY PAID THE TAX DUE ON THE RETURNED INCOME DURING THE COURSE OF APPEAL PROCEED ING. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) MA Y KINDLY BE DIRECTED TO ADMIT THE APPEAL IN THE INTER EST OF NATURAL JUSTICE. 2. THE LEARNED CIT(A) OBSERVED FROM THE RECORD THAT ON RETURNED INCOME OF RS.3,75,60,120/-, THE TOTAL TAX PAYABLE W AS RS.1,60,86,653/- (TAX RS.1,21,57,798 + INTEREST U/S 234A, B & C RS.39,28,855) WHEREAS THE ADMITTED TAX PAID IS ONLY RS.20,57,391/- TDS AND RS.1,01,22,848/-, TILL THE DATE OF FILING T HE APPEAL. 3. THE LEARNED CIT(A) CONSIDERING THE FACT THAT NO ADMITTED TAX DUE ON RETURNED INCOME HAS BEEN PAID BEFORE FILING OF THE APPEAL, DISMISSED THE APPEAL OF THE ASSESSEE. HIS FINDINGS ARE REPRODUCED AS UNDER: 3. SECTION 249(4) (A) OF THE I.T. ACT READS AS UNDER: 'NO APPEAL UNDER THIS CHAPTER SHALL BE ADMITTED UNL ESS AT THE TIME OF FILING OF THE APPEAL- (A) WHERE THE RETURN HAS BEEN FILED BY THE ASSESSEE , THE ASSESSEE HAS PAID THE TAX DUE ON THE INCOME RETURNE D BY HIM.' ACCORDINGLY, THE APPELLANT WAS ASKED VIDE ORDER SHE ET ENTRY DATED 24.04.2009 THAT WHY THE APPEAL BE NOT DISMISSED FOR NON PAYMENT OF ADMITTED TAX. THE CASE WAS ITA NO. 2730/AHD/2009 FATEHSINH MOHANSINH CHAUHAN VS ACIT, CC-2, SURAT 3 ADJOURNED TO 20.05.2009. THE CASE WAS FINALLY HEARD ON 07.08.2.009 AND THE APPELLANT SUBMITTED THAT ON 28.07.2009, HE HAS FURTHER PAID AN AMOUNT OF RS.10,00,000/-. HOWEVER, STILL AS ON THE DATE, THE APPELLANT HAS NOT PAID THE ADMITTED TAX FULLY. 4. AS PER PROVISIONS OF SECTION 249(4)(A) OF THE I. T. ACT 'NO APPEAL SHALL BE ADMITTED UNLESS AT THE TIME OF FILING OF APPEAL, THE ASSESSEE HAS PAID THE TAX DUE ON THE RETURNED INCOME'. IN THIS CASE, ON THE DATE OF FILI NG OF APPEAL I.E. ON 29.01.2009, THE APPELLANT HAS NOT PA ID THE ADMITTED TAX FULLY HENCE, THE APPEAL CANNOT BE ADMI TTED. EVEN ON THE DATE OF HEARING, THE ADMITTED TAX HAS N OT BEEN PAID FULLY. 5. THE SECTION 249(4) HAS BEEN AMENDED BY DIRECT TA X LAWS (AMENDMENT) ACT,1989 W.E.F. 01.04.1989 - THE SCOPE AND EFFECT OF THE AMENDMENTS MADE BY THIS ACT IN SECTION 249 HAVE BEEN ELABORATED IN THE FOLLOWING P ORTION OF THE DEPARTMENTAL CIRCULAR NO.559 DATED 4 TH MAY, 1990 (REPRODUCED IN THE BOOK INCOME-TAX LAW BY CHATURVED I & PITHISARIA FIFTH EDITION PAGE 7610) AS UNDER: 10.9 AMENDMENT OF SUB-SECTION (4) OF SECTION 249 DEALING WITH THE PAYMENT OF TAX DUE ON RETURNED INC OME BEFORE FILING AN APPEAL-SUB SECTION (4) OF SECTION 249 OF THE INCOME-TAX ACT PROVIDES THAT NO APPEAL SHALL BE ADMITTED UNLESS, AT THE TIME OF FILING THE APPEAL, THE ASSESSEE HAS (A) WHERE A RETURN HAS BEEN FILED BY HIM, PAI D THE TAX DUE ON THE INCOME RETURNED BY HIM, OR (B) WHERE NO RETURN HAS BEEN FILED BY HIM, PA ID AN AMOUNT EQUAL TO THE AMOUNT OF ADVANCE TAX WHICH WAS PAYABLE BY HIM. UNDER THE OLD PROVISIONS OF A PROVISO TO THE SAID S UB- SECTION(4), DISCRETION WAS ALLOWED TO THE FIRST APP ELLATE AUTHORITY I.E. THE DEPUTY COMMISSIONER (APPEALS) OR THE ITA NO. 2730/AHD/2009 FATEHSINH MOHANSINH CHAUHAN VS ACIT, CC-2, SURAT 4 COMMISSIONER(APPEALS), TO WAIVE THE ABOVE REQUIREME NT FOR GOOD AND SUFFICIENT REASONS. 10.10 IN A CASE WHERE THE ASSESSEE' HAS FILED A RET URN OF INCOME, THERE IS NO REASON AS TO WHY HE SHOULD NOT HAVE PAID THE TAX DUE ON THE BASIS OF INCOME DECLARED IN THE RETURN. THIS IS ALL THE MORE NECESSARY NOW UNDER NE W PROCEDURE OF ASSESSMENT, WHICH HAS BECOME EFFECTIVE FROM APRIL 1, 1989, ACCORDING TO WHICH THE ASSESSEE MUST PAY AT THE TIME OF FILING THE RETURN, NOT ONLY THE TAX DUE ON THE BASIS OF THE RETURNED INCOME, BUT ALSO THE INTE REST DUE, IF ANY, FOR LATE FILING OF THE RETURN AND FOR DEFAULTS IN THE PAYMENT OF ADVANCE TAX. IN VIEW OF THIS, THERE IS NO JUSTIFICATION FOR THE SAID PROVISO TO SUB-SECTION ( 4), AT LEAST TO THE EXTENT IT ALLOWS DISCRETION TO THE FIRST APP ELLATE AUTHORITY TO ADMIT AN APPEAL EVEN WHERE TAX ON THE BASIS OF THE RETURNED INCOME HAS NOT BEEN PAID. THE AMEND ING ACT, 1989 HAS, THEREFORE, AMENDED THE SAID PROVISO TO LIMIT THE DISCRETION OF THE FIRST APPELLATE AUTHORI TY TO ADMIT AN APPEAL ONLY IN CASES FALLING IN CLAUSE (B) OF SU B-SECTION (4) I.E. WHERE NO RETURN HAS BEEN FILED BY THE ASSE SSEE AND THE ASSESSEE HAS NOT PAID AN AMOUNT EQUAL TO TH E AMOUNT OF ADVANCE TAX PAYABLE BY HIM. IT, THEREFORE , FOLLOWS THAT WHERE AN ASSESSEE HAS FILED A RETURN O F INCOME, HIS APPEAL WILL NOW BE ADMITTED BY THE FIRS T APPELLATE AUTHORITY ONLY IF HE HAS PAID THE TAX DUE ON THE RETURNED INCOME.' 6. IN VIEW OF THE AMENDED PROVISION OF SECTI ON 249(4) EFFECTIVE FROM 1.4.89 AND BOARD'S CIRCULAR NO.559 D TD. 4.5.1990 AND THE FACT THAT THE APPELLANT HAS NOT PA ID THE ADMITTED TAX FULLY ON THE DATE OF FILING THE APPEAL (AND EVEN ON THIS DATE, THE SAME IS NOT PAID), THE APPEA L CANNOT BE ADMITTED. HENCE, THE APPEAL IS DISMISSED ON THIS ACCOUNT. 7. IN THE RESULT, THE APPEAL IS DISMISSED. 4. THE ASSESSEE FILED WRITTEN SUBMISSION STATING T HEREIN THAT THE ASSESSEE HAS FULLY PAID THE ADMITTED TAX ON RETURNE D INCOME IN A SUM ITA NO. 2730/AHD/2009 FATEHSINH MOHANSINH CHAUHAN VS ACIT, CC-2, SURAT 5 OF RS.1,60,86,653/- ON DIFFERENT DATES FROM 28-01-2 009 TO 17-09-2009 AND FILED COPIES OF THE CHALLANS. THE ASSESSEE RELI ED UPON THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF BHUMIR AJ CONSTRUCTIONS VS ADDL. CIT 11 TAXMAN.COM 333 [131 I TD 406 (MUM)] IN WHICH IT WAS HELD WHERE THE ASSESSEE PAID THE TAX DUE ON INCOME RETURNED ALBEIT AFTER THE DISPOSAL OF THE APPEAL BY THE LEARNED CIT(A), ON SUCH PAYMENT THE DEFECT IN APPEAL DUE TO NON-COMPLIANCE OF A DIRECTORY REQUIREMENT OF PAYING SUCH TAX BEFORE FIL ING OF THE APPEAL, STOOD REMOVED AND RESTORE THE APPEAL TO THE FILE OF THE LEARNED CIT(A) FOR DISPOSAL ON MERIT. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, REQUESTED THAT THE APPEAL MAY BE RESTORE D TO THE FILE OF THE LEARNED CIT(A) WITH DIRECTION TO DISPOSE OF THE APP EAL ON MERIT. 5. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDER OF THE LEARNED CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE AS SESSEE IN THE WRITTEN SUBMISSIONS FILED THE DETAILS AND ALL THE C OPIES OF THE CHALLANS TO SHOW THAT THE ASSESSEE HAS FULLY PAID THE ADMITT ED TAX ON RETURNED INCOME AS PER THE OBSERVATION OF THE LEARNED CIT(A) IN A SUM OF RS.1,60,86,653/-. THE ITAT MUMBAI BENCH IN THE CASE OF BHUMIRAJ CONSTRUCTIONS (SUPRA) HELD IN PARA 12 AS UNDER: 12. ADVERTING TO THE FACTS OF THE INSTANT CASE WE FIND THAT THE ASSESSEE PAID THE TAX DUE ON INCOME RETURN ED ALBEIT AFTER THE DISPOSAL OF APPEAL BY THE LD. CIT( A). ON SUCH PAYMENT, THE DEFECT IN THE APPEAL DUE TO NON- COMPLIANCE OF A DIRECTORY REQUIREMENT OF PAYING SUC H TAX BEFORE THE FILING OF THE APPEAL, STOOD REMOVED. EX CONSEQUENTI THIS APPEAL SHOULD HAVE BEEN REVIVED BY THE ITA NO. 2730/AHD/2009 FATEHSINH MOHANSINH CHAUHAN VS ACIT, CC-2, SURAT 6 LD. FIRST APPELLATE AUTHORITY. UNDER SUCH CIRCUMSTA NCES WE SET ASIDE THE IMPUGNED ORDER AND RESTORE THE MATTER TO THE FILE OF THE LEARNED CIT(A) FOR DISPOSAL OF THE APPEAL ON MERITS. 6.1 CONSIDERING THE ABOVE DISCUSSIONS IT IS CLEAR T HAT ITAT MUMBAI BENCH IN THE CASE OF BHUMIRAJ CONSTRUCTIONS(SUPRA) HELD THAT WHEREAS THE PAYMENT OF SUCH TAX IS MANDATORY BUT R EQUIREMENT OF PAYING SUCH TAX BEFORE FILING APPEAL IS ONLY DIRECT ORY. WHEN THE DEFECT IN THE APPEAL, BEING THE NON-PAYMENT OF SUCH TAX, I S REMOVED, THE EARLIER DEFECTIVE APPEAL BECOMES VALID. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE IMPUGNED ORDER AND RESTORE THE MAT TER TO THE FILE OF THE LEARNED CIT(A) WITH DIRECTION TO DECIDE THE APP EAL OF THE ASSESSEE ON MERITS. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- ITA NO. 2730/AHD/2009 FATEHSINH MOHANSINH CHAUHAN VS ACIT, CC-2, SURAT 7 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD