Smt.Sushila Devi Malu , Kalaburagi V. Income Tax Officer Ward-3 , Kalaburagi

ITA 564/BANG/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1921 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-11-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 28-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Keywords: Condonation of delay
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO. 564/BANG/2018 ASSESSMENT YEAR : 2013 - 14 SMT. SUSHILA DEVI MALU, LR OF LATE SHRI RAM GOPAL K MALU, PLOT NO.13, MALU HOUSE, MSK MILL ROAD, INDUSTRIAL AREA, KALABURAGI 585 102. PAN: ACXPM 9597R VS. THE INCOME TAX OFFICER, WARD 3, KALABURAGI 585 103. APP ELL ANT RESPONDENT APPELLANT BY : SHRI SREEHARI KUTSA, CA RESPONDENT BY : DR. P .V. PRADEEP KUMAR, ADDL.CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 15.11 .201 8 DATE OF PRONOUNCEMENT : 20 .11 .201 8 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 24.11.2017 OF CIT(APPEALS), GULBARGA FOR THE ASSESSMENT YEAR 2 013-14. 2. THE ASSESSEE IN THIS CASE IS AN INDIVIDUAL EAR NING INCOME FROM HOUSE PROPERTY AND INCOME FROM BUSINESS. FOR THE A Y 2013-14, SHE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,68, 93,667. AN ORDER OF ASSESSMENT DATED 28.12.2016 WAS PASSED U/S. 143(3) OF THE INCOME-TAX ACT, 1961 [THE ACT] DETERMINING THE TOTAL INCOME OF ASSESSEE AT RS.2,69,27,824. AGGRIEVED BY THE ADDITIONS MADE IN THE ORDER OF ITA NO.564/BANG/2018 PAGE 2 OF 6 ASSESSMENT, THE ASSESSEE FILED APPEAL BEFORE THE CI T(APPEALS). THE CIT(APPEALS) NOTICED THAT THE ASSESSEE HAD NOT PAID TAXES ON THE RETURNED INCOME AND THEREFORE IN VIEW OF THE PROVISIONS OF S ECTION 249(4)(A) OF THE ACT, THE APPEAL FILED BY THE L/H OF THE ASSESSEE, S MT. SUSHILA DEVI MALU WAS NOT MAINTAINABLE AND ACCORDINGLY THE ASSESSEES APPEAL WAS DISMISSED IN LIMINE UNADMITTED. AGGRIEVED BY THE AFORESAID ORDER OF CIT(APPEALS), THE ASSESSEE HAS FILED THE PRESENT AP PEAL BEFORE THE TRIBUNAL. 3. THERE IS A DELAY OF 23 DAYS IN FILING THE APPEAL WHICH HAS BEEN EXPLAINED AS DUE TO SUDDEN DEATH OF HUSBAND AND THE IGNORANCE OF THE WIFE REGARDING THE AFFAIRS OF BUSINESS OF HER HUSBAND. WE ARE OF THE VIEW THAT THE DELAY IN FILING THE APPEAL NEEDS TO BE CONDONED ACCEPTING THE REASONS GIVEN IN THE APPLICATION FOR CONDONATION OF DELAY A ND KEEPING IN MIND THE JUDICIAL PRONOUNCEMENTS REFERRED TO IN THE SAID APP LICATION FOR CONDONATION OF DELAY. 4. AS FAR AS THE MERITS OF THE APPEAL ARE CONCERNED , THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE CIT(APPEA LS) HAS NOT DECIDED THE APPEAL OF THE ASSESSEE ON MERITS FOR THE REASON THAT THE TAXES DUE ON THE RETURNED INCOME WAS NOT PAID BY THE ASSESSEE. THE ASSESSEE FILED BEFORE US CHALLANS EVIDENCING THE PAYMENT OF TAXES ON THE INCOME DECLARED IN THE RETURN OF INCOME. THE LD. COUNSEL FOR THE A SSESSEE SUBMITTED THAT SINCE THE TAXES DUE ON THE RETURNED INCOME ARE PAID , THE APPEAL SHOULD BE ADMITTED FOR ADJUDICATION. ON THE OTHER HAND, THE L D. DR SUBMITTED THAT THE PAYMENT OF TAXES NEEDS TO BE VERIFIED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE P ROVISIONS OF SEC.249(4) OF THE ACT READS AS FOLLOWS: ITA NO.564/BANG/2018 PAGE 3 OF 6 SECTION 249(4) : NO APPEAL UNDER THIS CHAPTER SHAL L BE ADMITTED UNLESS AT THE TIME OF FILING OF THE APPEAL, ( A ) WHERE A RETURN HAS BEEN FILED BY THE ASSESSEE, T HE 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 W HICH WAS PAYABLE BY HIM : PROVIDED THAT, IN A CASE FILLING UNDER CLAUSE (B) A ND ON AN APPLICATION MADE BY THE APPELLANT IN THIS BEHALF, T HE CIT(A) MAY, FOR ANY GOOD AND SUFFICIENT REASON TO BE RECORDED I N WRITING, EXEMPT HIM FROM THE OPERATION OF THE PROVISIONS OF THAT CLAUSE. 6. THE MUMBAI ITAT IN THE CASE OF BHUMIRAJ CONSTRUCTIONS VS. ACIT 131 ITD 406 (MUMBAI) HAD AN OCCASION TO DEAL WITH A CASE WHERE AN APPEAL BY THE ASSESSEE WAS DISMISSED FOR NON-PAYMEN T OF TAX DUE ON THE INCOME DECLARED IN THE RETURN OF INCOME. THE TRIBU NAL FIRSTLY OBSERVED THAT THERE IS A DISTINCTION BETWEEN A MANDATORY AND DIRE CTORY PROVISION. IF THE NON-COMPLIANCE WITH THE REQUIREMENT OF LAW EXPOSES THE ASSESSEE TO THE PENAL PROVISION, THEN IT IS MANDATORY, BUT IF NO PE NAL CONSEQUENCES FOLLOW ON NON-FULFILLMENT OF THE REQUIREMENT, THEN USUALLY IT IS A DIRECTORY PROVISION. OMISSION TO COMPLY WITH A MANDATORY REQUIREMENT REN DERS THE ACTION VOID, WHEREAS OMISSION TO DO THE DIRECTORY REQUIREMENT MA KES IT ONLY DEFECTIVE OR IRREGULAR. ON THE REMOVAL OF SUCH DEFECT, THE IR REGULARITY STANDS REMOVED AND THE STATUS OF VALIDITY IS ATTACHED. THE TRIBUN AL RELIED ON THE FOLLOWING DECISION IN COMING TO THE ABOVE CONCLUSION: M.L. SRINIVASA SETTY & SONS VS. STATE OF KARNATAKA (1991) 99 CTR (KAR) 77 : (19 92) 193 ITR 548 (KAR) AND CIT VS. TREHAN ENTERPRISES (2001) 168 CTR (J&K) 274 : (2001) 248 ITR 333 (J&K). THE TRIBUNAL THEREAFTER OBSERVED THAT APPEAL FILED WITHOUT PAYING TAX DUE ON RETURNED INCOME IS ONLY DEFECTIVE , BUT NOT VOID. THUS, IF TAX IS PAID ON THE INCOME RETURNED, EITHER BEFORE O R AT THE TIME OF OR AFTER THE FILING OF RETURN, IT WILL BE SUFFICIENT COMPLIA NCE WITH THE PROVISIONS OF SUB- ITA NO.564/BANG/2018 PAGE 4 OF 6 S. (4) OF S. 249. THE PREREQUISITE IS THAT THE PAYM ENT OF SUCH TAX, IN THE CATEGORY OF CASES IN WHICH TAX IS PAID AFTER THE FI LING OF RETURN, SHOULD BE BEFORE THE ADMISSION OF FIRST APPEAL. IN CASE SUCH TAX IS NOT PAID UPTO THE FILING OF APPEAL BEFORE THE CIT(A), THE SAME SHALL NOT BE ADMITTED. IN OTHER WORDS, IF THE APPEAL IS TO BE ADMITTED BY THE FIRST APPELLATE AUTHORITY, IT IS SINE QUA NON THAT THE ASSESSEE MUST HAVE MADE THE P AYMENT OF TAX ON THE INCOME RETURNED. IF NO PAYMENT OF TAX ON THE INCOME RETURNED IS MADE AT ALL AND THE APPEAL IS FILED, THAT CANNOT BE ADMITTED. I F, HOWEVER, 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 PAY MENT OF TAX AND TAKEN UP FOR HEARING. THE TRIBUNAL EXAMINED THE OBJECTIVE B EHIND S. 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 AFT ER THE FILING OF APPEAL BUT BEFORE IT IS TAKEN UP FOR DISPOSAL VALIDATES TH E DEFECTIVE APPEAL, THEN THERE IS NO REASON AS TO WHY THE DOORS OF JUSTICE B E CLOSED ON A POOR ASSESSEE WHO COULD MANAGE TO MAKE THE PAYMENT OF TA X 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. WHEREAS THE PAYME NT OF SUCH TAX IS MANDATORY BUT THE REQUIREMENT OF PAYING SUCH TAX BE FORE FILING APPEAL IS ONLY DIRECTORY. WHEN THE DEFECT IN THE APPEAL, BEIN G THE NON-PAYMENT OF SUCH TAX, IS REMOVED, THE EARLIER DEFECTIVE APPEAL BECOMES VALID. ONCE WE CALL 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. THE TRIBUNAL U LTIMATELY HELD THAT IF TAX DUE ON INCOME RETURNED IS PAID EVEN AFTER DISPOSAL OF THE APPEAL BY THE CIT(A), IF SUCH PAYMENT IS MADE THE DEFECT IN THE A PPEAL DUE TO NON- COMPLIANCE OF A DIRECTORY REQUIREMENT OF PAYING SUC H TAX BEFORE THE FILING OF ITA NO.564/BANG/2018 PAGE 5 OF 6 THE APPEAL, STOOD REMOVED. EX CONSEQUENTI THE APPEAL SHOULD HAVE BEEN REVIVED BY THE FIRST APPELLATE AUTHORITY. 7. IN THE PRESENT CASE, THE TAXES DUE ON RETURNED INCOME IS CLAIMED TO HAVE BEEN PAID. THEREFORE, THE APPEAL BY THE ASSESS EE AGAINST THE ORDER OF ASSESSMENT SHOULD BE ADMITTED AND ADJUDICATED BY THE CIT(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, T HEN THE APPEAL OF THE ASSESSEE SHOULD BE CONSIDERED AS PROPERLY INSTITUTE D AND SHOULD BE HEARD AND DECIDED BY THE CIT(APPEALS) ON MERITS. FOLLOWI NG THE AFORESAID DECISION, WE SET ASIDE THE ORDER OF CIT(APPEALS) AN D DIRECT THE CIT(A) TO DECIDE THE APPEAL ON MERITS, SUBJECT TO VERIFICATIO N OF PAYMENT OF TAXES DUE ON THE RETURNED INCOME. 8. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF NOVEMBER, 2018. SD/- SD/- ( INTURI RAMA RAO ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 20 TH NOVEMBER, 2018. / DESAI SMURTHY / ITA NO.564/BANG/2018 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDE NT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.