Sri Y Lorudu Reddy, Hyderabad V. The DCIT Cent Cir-1 Visakhapatnam, Visakhapatnam

ITA 287/VIZ/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56873 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-12-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 23-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T LUCAS PETER

Judgement Text

ITA NOS286 TO 289 G RAJASEKHAR REDDY, ETC., HYDERAB AD/VIZAG/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI D. MANMOHAN , VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO S . 286 /VIZAG/ 20 11 ASSESSMENT YEAR : 2008 - 09 G. RAJASEKHAR REDDY HYDERABAD VS. DCIT CENTRAL CIRCLE - 1 VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO. AEPPG 9099A ITA NOS.287/VIZAG/2011 ASSESSMENT YEAR : 2008 - 09 Y. LORUDU REDDY HYDERABAD VS. DCIT CENTRAL CIRCLE - 1 VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO. AAEPY 9192K ITA NOS.288&289/VIZAG/2011 ASSESSMENT YEARS : 2008 - 09 & 2009 - 10 Y. JOJI REDDY HYDERABAD VS. DCIT CENTRAL CIRCLE - 1 VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AAOPY 7015K APPELLANT BY: SHRI SAMUEL NAGADESI, CA RESPONDENT BY: SH RI T. LUCAS PETER, CIT(DR) DATE OF HEAR I NG: 14.12.2011 DATE OF PRONOUNCEMENT: 14.12.2011 ORDER PER SHRI D. MANMOHAN, VICE PRESIDENT:- THESE FOUR APPEALS, FILED BY THE RESPECTIVE ASSES SEES, ARE DIRECTED AGAINST THE ORDERS PASSED BY THE CIT(A)-I, HYDERABA D AND INVOLVE A COMMON ISSUE. THEREFORE, THEY ARE DISPOSED OF BY A COMBIN ED ORDER FOR THE SAKE OF CONVENIENCE. BRIEFLY STATED THE ASSESSEES PREFERRE D AN APPEAL BEFORE THE CIT(A) WITHOUT PAYING THE ADMITTED TAX ON THE RETUR NED INCOME. THOUGH IT WAS BROUGHT TO THE NOTICE OF THE ASSESSEES DURING T HE COURSE OF HEARING OF ITA NOS286 TO 289 G RAJASEKHAR REDDY, ETC., HYDERAB AD/VIZAG/2011 2 THE APPEAL, THE ASSESSEES COULD NOT GIVE ANY EXPLAN ATION AND HENCE THE APPEALS WERE DISMISSED AS NOT ADMITTED AS PER THE P ROVISIONS CONTAINED IN SECTION 249(4)(A) OF THE INCOME-TAX ACT (HEREINAFTE R CALLED AS AN ACT). IN THIS REGARD, THE LD. CIT(A) OBSERVED THAT PAYMENT O F TAX DUE ON RETURNED INCOME BY ASSESSEE, BEFORE FILING AN APPEAL AGAINST THE ASSESSMENT ORDER, IS A CONDITION PRECEDENT AND NON-COMPLIANCE OF THE SAM E RENDERS APPEAL NOT MAINTAINABLE, IN THE LIGHT OF THE DECISION OF THE H ONBLE MADRAS HIGH COURT IN THE CASE OF S. ALAGARSAMY VS. ITO 296 ITR 43. 2. THE LD. COUNSEL CONTENDED BEFORE US THAT THE RET URNS OF INCOME WERE FILED PURSUANT TO A SEARCH CONDUCTED BUT DUE TO STR INGENT FINANCIAL CONDITION OF THE ASSESSEES, ADMITTED TAX COULD NOT BE PAID IN TIME. THIS WAS ATTRIBUTABLE TO THE SLUGGISH TREND IN THE REAL ESTA TE SECTOR. IT MAY BE NOTICED THAT ALL THE APPEALS WERE FILED ON 31.1.2011 BEFORE THE CIT(A)-I, HYDERABAD. IT WAS CONTENDED THAT THE CIT(A) GRANTED LESS TIME FOR PAYMENT OF THE ADMITTED TAX BUT THE ASSESSEES COULD NOT COMPLY WIT H THE DIRECTION ON ACCOUNT OF PAUCITY OF FUNDS BUT AT THE EARLIEST ADM ITTED TAX WAS PAID; CHALLANS IN PROOF OF PAYMENT OF ADMITTED TAX WERE FILED ALON G WITH THE APPEAL PAPERS. DEPENDING ON THE FINANCIAL VIABILITY, ADMITTED TAX WAS PAID BY THE ASSESEES AS UNDER: NAME ASSESSMENT YEAR ADMITTED TAX AMOUNT ( `. ) DATE G. RAJASEKHAR REDDY 2008 - 09 5,47,200/ - 22.03.2011 Y. LORUDU REDDY 2008 - 09 1,51 ,590/ - 21.06.2011 Y. JOJI REDDY 2008 - 09 18,36,080/ - 18.08.2011 Y. JOJI REDDY 2009 - 10 15,49,380/ - 23.08.2011 3. THE APPEALS WERE HOWEVER DISPOSED OF ON 26.07.20 11 ON THE GROUND THAT ADMITTED TAX WAS NOT PAID IN TIME I.E. BEFORE FILING THE APPEALS. THE LD. COUNSEL RELIED UPON THE FOLLOWING DECISIONS OF THE ITAT IN SUPPORT OF HIS CONTENTION THAT THE DEFECT, IF ANY, IS A CURABLE DE FECT AND IT SHOULD NOT AFFECT THE RIGHT OF THE ASSESSEES TO CHALLENGE THE ORDERS OF THE ASSESSING OFFICER IF THE ADMITTED TAX IS PAID SUBSEQUENTLY: ITA NOS286 TO 289 G RAJASEKHAR REDDY, ETC., HYDERAB AD/VIZAG/2011 3 1. 43 SOT 322 (HYD) IN THE ITAT HYDERABAD BENCH `B ENDEAVOUR INDUSTRIES LTD. VS. DCIT, CIRCLE-2(2), HYDERABAD 2. 131 ITD 406 (MUM) IN THE ITAT MUMBAI BENCH `F B HUMIRAJ CONSTRUCTIONS VS. ACIT, RANGE-15(1). 3. 175 ITR 540 VIJAY PRAKASH D. MEHTA & ANR. VS. CO LLECTOR OF CUSTOMS 4. IN PARTICULAR, THE LD. COUNSEL STRONGLY RELIED U PON THE FOLLOWING OBSERVATIONS OF THE ITAT `F BENCH MUMBAI IN THE CA SE OF BHUMIRAJ CONSTRUCTIONS (SUPRA): THUS IF TAX IS PAID ON THE INCOME RETURNED, EITHER BEFORE OR AT THE TIME OF OR AFTER THE FILING OF RETURN, IT WI LL BE SUFFICIENT COMPLIANCE WITH THE PROVISIONS OF SUB-SECTION (4) O F SECTION 249. THE PRE-REQUISITE IS THAT THE PAYMENT OF SUCH TAX, IN THE CATEGORY OF CASES IN WHICH TAX IS PAID AFTER THE FILING OF R ETURN, SHOULD BE BEFORE THE ADMISSION OF FIRST APPEAL. IN CASE SUCH TAX IS NOT PAID UP TO THE FILING OF APPEAL BEFORE THE CIT(A), THE S AME SHALL NOT BE ADMITTED. IN OTHER WORDS IF THE APPEAL IS TO BE AD MITTED BY THE FIRST APPELLATE AUTHORITY, IT IS SINE QUA NON THAT THE ASSESSEE MUST HAVE MADE THE PAYMENT OF TAX ON THE INCOME RETURNED . IF NO PAYMENT OF TAX ON THE INCOME RETURNED IS MADE AT AL L AND THE APPEAL IS FILED, THAT CANNOT BE ADMITTED. IF HOWEV ER THE APPEAL IS FILED WITHOUT THE PAYMENT OF SUCH TAX BUT SUBSEQUEN TLY THE REQUIRED AMOUNT OF TAX IS PAID, THE APPEAL SHALL BE ADMITTED ON PAYMENT OF TAX AND TAKEN UP FOR HEARING. NOW THE M OOT POINT FOR DETERMINATION IS THAT IF THE DUE TAX IS PAID BY THE ASSESSEE AFTER THE FILING OF FIRST APPEAL BUT BEFORE IT IS TAKEN UP FO R CONSIDERATION, IT IS ADMITTED AND TAKEN UP FOR DISPOSAL, THEN CAN THE PA YMENT OF DUE TAX AFTER THE NON-ADMISSION OF APPEAL BY THE AUTHOR ITY CAN COME TO THE RESCUE OF THE ASSESSEE AND SAVE THE APPEAL FROM NON- CONSIDERATION? IN OUR CONSIDERED OPINION THE ANSWE R TO THIS QUESTION NEEDS TO BE GIVEN IN AFFIRMATIVE. THE OBJECTIVE BEHIND SECTION 249(4) IS TO ENSURE T HE PAYMENT OF TAX ON INCOME RETURNED BEFORE THE ADMISS ION OF APPEAL. IF SUCH PAYMENT AFTER THE FILING OF APPEAL BUT BEFO RE IT IS TAKEN UP FOR DISPOSAL VALIDATES THE DEFECTIVE APPEAL, THEN T HERE 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 SUCH TAX ANTE THE FILING OF FIRST APPEAL IS ONLY DIRECTORY AND NOT MANDATORY. WHEREA S THE PAYMENT OF SUCH TAX IS MANDATORY BUT THE REQUIREMENT OF PAY ING SUCH-TAX BEFORE FILING APPEAL IS ONLY DIRECTORY. ONCE WE CA LL AN APPEAL AS VALID, IT IS IMPLICIT THAT IT IS NOT TIME-BARRED. 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 WH EN IT WAS ORIGINALLY FILED AND NOT WHEN THE DEFECT IS REMOVED . ITA NOS286 TO 289 G RAJASEKHAR REDDY, ETC., HYDERAB AD/VIZAG/2011 4 5. HE HAS ALSO REFERRED TO THE FACTUAL MATRIX OF TH E CASE TO SUBMIT THAT IN THE FIRST TWO APPEALS, ADMITTED TAX WAS PAID BEF ORE THE DISPOSAL OF THE APPEALS BY THE CIT(A) AND EVEN THIS FACT WAS OVERLO OKED BY THE CIT(A). HAVING REGARD TO THE OVERALL CIRCUMSTANCES OF THE C ASE AND IN THE INTERESTS OF THE SUBSTANTIAL JUSTICE, BY RESPECTFULLY FOLLOWI NG THE DECISION OF THE ITAT `F BENCH, MUMBAI, WE SET ASIDE THE ORDERS PAS SED BY THE LD. CIT(A) AND DIRECT HIM TO RECONSIDER THE MATTER ON M ERITS IN ACCORDANCE WITH LAW. 6. IN THE RESULT, THE APPEALS FILED BY THE RESPECTI VE ASSESSEES ARE ALLOWED AS DECLARED IN THE OPEN COURT. PRONOUNCED IN THE OPEN COURT ON 14.12.2011. SD/- SD/- (BR BASKARAN) ( D. MANMOHAN ) ACCOUNTANT MEMBER VICE PRESIDENT VG/SPS VISAKHAPATNAM, DATED 14 TH DECEMBER, 2011 COPY TO 1 SHRI SAMUEL NAGADESI, CHARTERED ACCOUNTANT, 302, GO LDEN GREEN APARTMENTS, ERRAM MANZIL COLONY, PUNJAGUTTA, HYDERA BAD-500 082. 2 DCIT, CENTRAL CIRCLE - 1, VISAKHAPATNAM 3 CIT, HYDERABAD 4 THE CIT (A) - I, H YDERABAD 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM