2008 (6) TMI 170 - HC - Income Tax

High Court upholds Tribunal decision on tax returns, emphasizes need to pay admitted tax before appealing penalties.

The Madras High Court dismissed the Revenue's appeal concerning the interpretation of section 249(4) on filing returns without paying admitted tax. The ... Assessee made payment of tax due on the admitted income but had wrongly remitted in subsequent year - CIT (Appeals) dismissed the assessee’s appeal on the ground that the admitted tax on the returned income was not paid till the date of filing of the appeal - Tribunal set aside the order of the Commissioner with a direction to decide the issue on the merits after verifying the payment of tax on admitted income - no infirmity in the order of tribunal Issues:1. Interpretation of section 249(4) in relation to filing a return without payment of admitted tax.2. Consideration of a judgment by the Madras High Court regarding the payment of admitted tax before admitting an appeal against a penalty.3. Examination of the mandatory nature of section 249(4)(a) and the consequences of not paying the tax due on the income returned.Analysis:1. The appeal before the Madras High Court involved the interpretation of section 249(4) concerning the filing of a return without payment of admitted tax. The Revenue contended that the Income-tax Tribunal erred in not considering this provision due to an amendment made in 1989. The court analyzed the relevant legal provisions and found that the Tribunal's decision was justified as the amendment did not confer power on the appellate authority to deal with cases where tax had not been paid upon filing the return. Therefore, the court dismissed this issue raised by the Revenue.2. Another issue raised in the appeal was the consideration of a judgment by the Madras High Court regarding the payment of admitted tax before admitting an appeal against a penalty. The court referred to the case of CIT v. Smt. G. A. Samanthakamani and the requirement for the assessee to pay the admitted tax liability before filing an appeal against a penalty. The Tribunal's decision to set aside the order of the Commissioner of Income-tax (Appeals) and direct a review of the tax payment for the assessment year in question was deemed appropriate by the court.3. The third issue in the appeal pertained to the mandatory nature of section 249(4)(a) and the consequences of not filing a return with the tax due on the income returned. The court examined the facts presented by the assessee, where it was claimed that the tax due on the admitted income had been paid but for the subsequent year. The Tribunal had remitted the case to the Commissioner of Income-tax (Appeals) to verify this claim and decide on the merits. The court found no irregularity in the remittal order and concluded that there was no substantial question of law to entertain the appeal. Consequently, the court dismissed the appeal based on this issue.In summary, the Madras High Court's judgment addressed various issues related to the interpretation of tax laws, the payment of admitted tax before filing appeals, and the mandatory requirements for filing returns with the tax due. The court carefully analyzed each issue presented in the appeal and provided reasoned decisions based on the facts and legal provisions involved.