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of <h1>ITAT Bangalore directs CIT(Appeals) to decide appeal on merits, with focus on tax payment verification.</h1> <h3>M/s. Annapoorneshwari Investment Versus The Deputy Commissioner of Income Tax, Central Circle 2 (2), BANGALORE</h3> M/s. Annapoorneshwari Investment Versus The Deputy Commissioner of Income Tax, Central Circle 2 (2), BANGALORE - TMI Issues:1. Maintainability of appeal before CIT(Appeals) due to non-payment of taxes on returned income.2. Interpretation of Section 249(4) of the Income Tax Act.3. Precedents regarding the payment of taxes on returned income for admission of appeal.Issue 1:The appeal by the assessee was challenged before the CIT(Appeals) due to non-payment of taxes on the returned income, rendering it unadmitted. The CIT(Appeals) dismissed the appeal citing section 249(4)(a) of the Income Tax Act, which requires the payment of taxes on the income returned by the assessee for the appeal to be maintainable.Issue 2:Section 249(4) of the Income Tax Act was analyzed, which states that no appeal shall be admitted unless the assessee has paid the tax due on the income returned. The provision also allows for exemption by the CIT(A) under certain circumstances. The assessee argued that since taxes on the returned income were paid, the appeal should be admitted for adjudication.Issue 3:Various legal precedents were considered, including judgments by the Hon'ble Karnataka High Court and the Mumbai ITAT. These judgments clarified that the payment of taxes on the returned income, even after the filing of the appeal, validates the appeal. The requirement of paying taxes before the first appeal is considered directory, not mandatory. The tribunal emphasized that the objective of section 249(4) is to ensure tax payment on the returned income before the appeal's admission.In conclusion, the ITAT Bangalore directed the CIT(Appeals) to decide the appeal on merits, subject to verifying the payment of taxes due on the returned income. The decision was based on legal precedents and interpretations of the Income Tax Act, allowing for the admission of the appeal if taxes on the returned income were paid, even after the appeal was filed. The appeal by the assessee was allowed for statistical purposes, emphasizing the importance of tax compliance in maintaining the validity of appeals.
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