Pre-deposit condition relaxed after financial incapacity was shown, with remand directed for consideration on merits.

A pre-deposit condition for entertaining the second appeal was relaxed after the court considered the assessee's audited balance-sheet, which showed negligible cash and no fixed assets. Treating full compliance with the 20% deposit requirement as unjust in the circumstances, the court directed a reduced pre-deposit of Rs. 10 lakh within four weeks. On deposit, it set aside the Tribunal's and first appellate authority's orders and remanded the dispute to the first appellate authority for decision on merits.

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Issues: Whether the Tribunal's order dismissing the second appeal for non-compliance with the pre-deposit condition should be interfered with and the matter remanded for consideration on merits.

Analysis: The appeal was dismissed by the Tribunal solely on the ground of non-payment of the pre-deposit quantified at 20% of the tax demand. The Court noted the appellant's audited balance-sheet, showing negligible cash balance and no fixed assets, and considered that insistence on the full pre-deposit would not serve the interests of justice. The Court therefore directed a reduced pre-deposit of Rs. 10 lakh within four weeks and, upon such deposit, found it to interfere with the orders of the Tribunal and the first appellate authority so that the dispute could be examined on merits.

Conclusion: The pre-deposit condition was relaxed, the impugned orders were set aside, and the matter was remanded to the first appellate authority for decision on merits, in favour of the assessee.

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