2004 (12) TMI 640 - AT - Income Tax

Tribunal sets aside order due to non-payment, emphasizes fresh decision on merits, grants hearing opportunity.

The Tribunal set aside the CIT(A)'s order dismissing the appeal in limine due to non-payment of full self-assessment tax, emphasizing the need for a fresh ... Form of appeal and limitation Issues Involved:1. Dismissal of appeal in limine due to non-payment of full self-assessment tax.2. Treatment of share income from M/s. Anant & Co. as undisclosed income.3. Consideration of rectification application as a revised return.4. Contradiction in deciding Ground No. VIII while dismissing the appeal in limine.Issue-wise Detailed Analysis:1. Dismissal of Appeal in Limine Due to Non-Payment of Full Self-Assessment Tax:The assessee's appeal was dismissed in limine by the CIT(A) because the assessee did not pay the full self-assessment tax on the block return of income as required by section 249(4)(a) of the Income-tax Act, 1961. The assessee argued that the balance self-assessment tax was not paid due to poor financial condition. The Tribunal noted that the balance self-assessment tax was eventually paid before the final hearing before the Tribunal. The Tribunal referenced the Hon'ble Karnataka High Court's decision in T. Govindappa Setty v. ITO, which held that a guarantee to prefer an appeal cannot be deprived off by taking a view that the petitioner failed to pay tax due on income shown in the return filed. The Tribunal also cited the Hon'ble Allahabad High Court in Kashiram Bajanlal v. CIT and the Hon'ble Supreme Court in Filmistan Ltd. v. CIT, which supported the view that the right to appeal is not destroyed by the late payment of tax.2. Treatment of Share Income from M/s. Anant & Co. as Undisclosed Income:The CIT(A) held that the share of income from M/s. Anant & Co. for assessment year 1991-92, where no return was filed under section 139, should be treated as undisclosed income. The CIT(A) relied on section 158BB(1)(c) and considered the assessed share income as undisclosed income. The assessee argued that the firm had already filed a return disclosing the share of the partners and that the assessed share of income was under appeal, and thus, the returned share should be considered. The Tribunal found that the rectification application regarding the assessed share income had not been disposed of, and thus the matter required reconsideration.3. Consideration of Rectification Application as a Revised Return:The CIT(A) considered the rectification application filed by the assessee during the assessment proceedings as a revised return. The assessee contended that the rectification application did not amount to filing a revised return under section 139(5) read with the proviso to section 158BC. The Tribunal noted that the rectification application was still pending and had not been disposed of, indicating a dispute over the self-assessment tax liability.4. Contradiction in Deciding Ground No. VIII While Dismissing the Appeal in Limine:The CIT(A) decided Ground No. VIII of the grounds of appeal but simultaneously dismissed the appeal in limine, which the assessee argued was contradictory. The Tribunal did not specifically address this issue but implied that the overall handling of the appeal by the CIT(A) required reconsideration due to the unresolved rectification application and the eventual payment of self-assessment tax.Conclusion:The Tribunal set aside the order of the CIT(A) and restored the matter for a fresh decision on merits, emphasizing the need to provide an opportunity for hearing to both parties. The Tribunal refrained from commenting on the merits of the case, focusing on the procedural aspects and the equitable considerations due to the eventual payment of the self-assessment tax. The appeal was allowed for statistical purposes.