Payment of Appeal Fee: where fee was paid but proof was initially absent, the appeal must be admitted and decided on merits.

Where the prescribed appeal fee was paid on the date of filing, non furnishing of the challan at institution is a curable procedural defect rather than a substantive failure; the Tribunal applied principles distinguishing substantive mandatory conditions from procedural formalities and held that documentary proof demonstrating payment (challan with PAN, AY, payment nature, CIN and date) warrants admission of the appeal. Outcome: impugned dismissal in limine set aside and matter restored to appellate file with direction to admit the appeal and decide on merits after affording hearing.

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Issues: Whether the learned Commissioner of Income Tax (Appeals) was justified in dismissing the appeal in limine on the ground of non-furnishing of proof of payment of appeal fee, when the challan evidencing payment was made on the date of filing the appeal.

Analysis: Section 249(1) read with section 249(4) of the Income-tax Act, 1961 and the rules thereunder require that an appeal be accompanied by the prescribed fee and proof of payment for admission. The requirement of payment of appeal fee is mandatory as a substantive condition for maintaining an appeal. However, where the substantive condition of payment is complied with and only documentary proof was not produced at the initial stage, the defect relates to procedure rather than substance. Procedural prescriptions are intended to advance justice and not to defeat substantive rights. The material placed on record (challan receipt bearing PAN, assessment year, nature of payment, amount, CIN and date of deposit) demonstrates that the appeal fee was paid on the date the appeal was instituted. In such circumstances the non-furnishing of the challan is a curable procedural lapse. The appellate authority ought to permit rectification or admit the appeal and decide the matter on merits rather than dismissing the appeal in limine, particularly where the revenue does not object to restoration for adjudication on merits.

Conclusion: The appeal is allowed in favour of the assessee; the impugned order of the learned CIT(A) is set aside and the matter is restored to the file of the learned CIT(A) with a direction to admit the appeal and adjudicate it on merits after affording reasonable opportunity of hearing to the appellant.

Ratio Decidendi: Where the prescribed appeal fee has been paid within time, non-furnishing of proof of payment at the initial stage is a curable procedural defect and does not justify dismissal of the appeal in limine; the appeal should be admitted and decided on merits after allowing rectification or restoration for adjudication.

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