2014 (1) TMI 1439 - AT - Income Tax

Tribunal sets aside CIT(A)'s order, directs reconsideration based on tax payment for fair hearing.

The Tribunal allowed the appeal for statistical purposes, setting aside the CIT(A)'s order and directing a reconsideration of the appeal based on the ... Failure to pay tax for pursuing appeal before CIT(A) - Default u/s 249(4)(a) - Held that:- Decision in Commissioner of Income-tax-III Versus K. Satish Kumar Singh [2012 (4) TMI 213 - KARNATAKA HIGH COURT] followed - After the dismissal of the appeal by the CIT(A) on account of a default under Section 249(4)(a) of the Act, if the assessee pays the admitted tax, the CIT(A) ought to recall the earlier order dismissing the appeal in-limine and to consider the appeal on merits - The issue has been restored for fresh adjudication by CIT(A) with directions to consider the plea of the assessee of having paid the tax due on the returned income and upon his being satisfied that the requirement of Section 249(4)(a) of the Act has been complied with. Issues:1. Treatment of capital gains as business income.2. Condonation of delay in filing appeal.3. Payment of admitted tax liability after appeal dismissal.Issue 1: Treatment of Capital Gains as Business IncomeThe appeal was against the Assessing Officer's decision to treat the capital gains declared by the assessee on sale/purchase of shares & securities as 'business income' instead of 'capital gains.' The CIT(A) dismissed the appeal as 'not maintainable' due to non-payment of full tax on the returned income before filing the appeal. The Tribunal considered the reasons for the delay in filing the appeal, noting the financial hardship faced by the assessee. Citing the Supreme Court's liberal approach in condoning delays, the Tribunal decided to condone the delay and proceed with the appeal on its merits.Issue 2: Condonation of Delay in Filing AppealThe Tribunal analyzed the reasons for the delay in filing the appeal, considering the financial hardship and bonafide belief of the assessee that the appeal could not be filed without paying the tax on the returned income. Despite opposition from the Departmental Representative, the Tribunal, following the principles of substantial justice, decided to condone the delay in filing the appeal, citing the Supreme Court's judgment emphasizing a liberal approach in matters of condonation of delay.Issue 3: Payment of Admitted Tax Liability After Appeal DismissalThe Revenue contended that the appeal was rightly dismissed by the CIT(A) due to non-payment of the admitted tax liability when the appeal was filed. However, the assessee subsequently paid the due tax and sought to set aside the CIT(A)'s order. The Tribunal referred to a judgment of the Hon'ble Karnataka High Court, stating that if the assessee pays the admitted tax after appeal dismissal, the CIT(A) should reconsider the appeal on its merits. Following this precedent, the Tribunal set aside the CIT(A)'s order and directed a reconsideration of the appeal based on the payment of the admitted tax, ensuring the assessee's right to be heard and a decision in accordance with the law.In conclusion, the Tribunal allowed the appeal for statistical purposes, setting aside the CIT(A)'s order and directing a reconsideration of the appeal based on the payment of the admitted tax liability, ensuring a fair hearing and decision in accordance with the law.