TaxTMI 
TaxTMI 
2001 (10) TMI 253
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....7 to 8-12-1997. The assessee did not pay any tax on the undisclosed income. The assessee, however, indicated in his return that Rs.1.8 lakhs seized during the search is to be considered as has been paid on account of tax on the undisclosed income. The income disclosed by the assessee, however, was not accepted by the Assessing Officer as no details were given by the assessee regarding the undisclosed income pertaining to the block period. The Assessing Officer after going through the seized material determined the undisclosed income for the block period at Rs.33,57,283. Aggrieved by the order of the Assessing Officer, the assessee preferred appeal before the CIT(A) challenging the various additions made by the Assessing Officer. 3. The learned CIT(A), in his order has observed that the assessee filed the return of income in respect of block period 1-4-1987 to 8-12-1997 showing undisclosed income of Rs.10 lakhs on 27-11-1998 which was found to be beyond 16 days or service of notice and thus attracted 158BFA interest for a period of one month. The learned CIT(A) has also observed that the assessee was required to pay total tax of Rs.6,12,000 by way of self-assessment tax including....
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.... of tax liability towards block assessment. The learned CIT(A) has further stated that even if the payment of Rs.4 lakhs is to be considered as payment towards the tax liability of block assessment, still, there is shortf all. The learned CIT(A) has also stated that the case of Mst. Kattiji relates to the delay in filing of the appeal and not regarding non-payment of admitted tax liability. Similarly, the case of N.L. Mehta pertains to a period when there was a provision for condonation of such lapses. Thus, the learned CIT(A) held that the appeal filed by the assessee was not maintainable under the provisions of section 249(4) of the Act and thus, the same becomes infructuous. The CIT(A), thus, dismissed the appeal filed by the assessee. 4. At the time of hearing the learned counsel for the assessee referred to the provisions of section 30 of the Income-tax Act, 1922 which reads as follows: "Provided that no appeal shall lie against an order under sub-section (1) of section 46 unless the tax has been paid." and section 249(4) of the Income-tax Act, 1961 reads as under: "Where a return has been filed by the assessee the assessee has paid the tax due on the income return....
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....which unfortunately, does not necessarily help the one view or the other, but only says the expression 'lie' may be an expression of doubtful meaning. We have, in any event here a case where two High Courts have taken two contrary views of the provisions of a statute and it would be reasonable, in any event, to say that the true meaning of the words 'shall lie' in the proviso is not beyond doubt and were it not beyond doubt we ought to put on the proviso a construction which will favour the assessee and which would not deprive him of the right of appeal together, because such a construction would be in consonance with right and justice rather than the construction which would deprive him of that right altogether." 5. The learned counsel further referred to the case of Kamdar Bros. of Jharia v. CIT [1955] 27 ITR 176 (Pat.) wherein the High Court held that the proviso does not state "no appeal shall be presented against an order under sub-section (1) of section 46 unless the tax has been paid". There is a distinction between the presentation of an appeal and the admission of an appeal and this distinction has been expressly recognised by the Legislature in the language of section ....
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....shall be sustainable against an order under sub-section (1) of section 46 unless the tax has been paid. The expression 'unless the tax has been paid' clearly shows that the right to file the appeal is there, but the appeal becomes effective only after the tax has been paid. The proviso does not say that 'no appeal shall lie....' unless the tax is paid on the date on which the appeal is sought to be filed or by the time of limitation for filing the appeal has expired." In other words, the proviso is silent on the point by which time the tax shall be deposited in order to make the appeal "lie". A proviso must be strictly construed and its scope cannot be widened by adding some words to it which does not exist in it. We have, therefore, to conclude that even if the tax is paid till the appeal is actually heard on the date of hearing, the appeal would be competent and relief can be given on its basis. 8. The learned counsel further invited our attention to the Orissa High Court decision in the case of CITv. Kalipada Ghose [1987] 167 ITR 173 wherein the High Court has laid down that "section 249(4) lays down condition that unless the admitted tax in a case where return has been fi....
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....sp; ----------------- Thus, according to the learned counsel, the entire tax payable on the returned income of Rs.6 lakhs was paid on or before 31-3-2000. The appeal was to be filed latest by 27-3-2000 which was actually filed on 24-3-2000. The counsel referred to the decision of the Delhi Bench of the Tribunal in the case of Encon Furnaces (P.) Ltd. v. Asstt. CIT [1996] 56 ITD 14 wherein the Tribunal held that "the same reason would also apply for admission of appeal if it is considered as a belated one following the ratio of the Hon'ble Supreme Court in the case of Filmistan Ltd. In the aforesaid case it was held by their Lordships that in case the tax is paid after the period of limitation has expired, it could be taken to have paid on the day when the tax is paid even though Memorandum of Appeal was presented earlier and within the period of limitation. Their Lordships further held that the question then have t....
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....he assessee rectifies the same within the specified period, that the Income-tax Officer may treat the return as invalid return." 12. The learned counsel thus prayed that the matter be restored to the file of the CIT(A) for fresh adjudication in accordance with law and further giving the appellant due and adequate opportunity of being heard. 13. The learned departmental representative contended that the full taxes were not paid before filing the appeal. He invited our attention to the appeal Form No. 35 (placed in the departmental compilation page (1) and stated that no taxes were paid as per the appeal memo. He further stated that as per the demand notice under section 156 of the I.T. Act there was only adjustment of refund of Rs. 27,830. He pointed out that the appeal was filed on 24-3-2000 whereas the request for adjustment of seized cash of Rs.1,80,000 was made only on 27-8-2000 (departmental compilation page 6). The learned departmental representative also invited our attention to section 30 of the Income-tax Act, 1922 and contended that no appeal to the Appellate Assistant Commissioner against the assessment order would "lie" under sub-section (1) of section 46 unless th....
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....n the parameters of the said statute and as such has no inherent powers in the matter of entertaining the appeal. He does not have power to transgress the limits placed by the statute. Under the circumstances, the CIT(A) was justified in not entertaining the appeal filed by the assessee." 15. The learned departmental representative also invited our attention to the judgment in the case of Lachmandas Arora v. Ganeshi Lal [1999] 8 SCC 532 where it is laid down that "there is no gain saying that the law of limitation may harshly affect a particular party. But it has to be applied with all its vigorous when the statute so prescribes. The Courts cannot extend the period of limitation on equitable grounds." The learned departmental representative, thus, contended that various cases relied upon by the learned counsel are old cases and they do not have any application to the amended provisions of section 249(4)(a) of the I.T. Act, 1961. He, therefore, prayed that the findings of the learned CIT(A) may be confirmed as the appeal filed before the CIT(A) was not maintainable under the provisions of section 249(4)(a) of the Act. 16. We have carefully considered the submissions made by th....
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....sp; Rs. 7,07,830 --------------- This tax covers the full tax due on Rs.10 lakhs returned income. The assessee was required to make the payment of Rs.6,12,000 including the interest under section 158BFA on the returned income of Rs.10 lakhs. But the assessee paid only Rs.2,07,830 (Rs.1,80,000 + Rs.27,830) by way of adjustments as mentioned above before filing the appeal on 24-3-2000. The payment of Rs.5 lakhs was paid after the filing of the appeal on 31-3-2000 which cannot be considered as payment made before filing the appeal. Therefore, it is an admitted fact that the assessee did not make the payment of tax which was due on the returned income of Rs.10 lakhs before filing the appeal. Therefore, the default of the assessee under section 249(4)(a) of the Act is cl....
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....acting the provisions for furthering the objects and not to defeat them. The requirement of section 249(4) regarding payment of tax on income returned, etc. cannot be said merely to regulate the exercise of the assessee's pre-existing right of appeal but in truth whittles down the right itself and cannot be regarded as mere rule of procedure. The provisions of section 249(4) are substantive provisions. This has been laid down by the Honourable Supreme Court in the cases of Hussain Kasam Dada (India) Ltd. v. State of M.P. [1953] 4 STC 114 and Collector of Customs and Excise v. A.S. Bawa AIR 1968 SC 13. Therefore, in order to get his appeal admitted by the first appellate authority, the assessee must comply with the mandatory requirements of the provisions of section 249(4)(a), wherever these have application as to the payment of tax due on the returned income before the expiry of the period of limitation of filing the appeal. On failure of the assessee to comply with the requirement the first appellate authority is competent not to admit the appeal. 18. The language of section 249(4)(a) is very plain and without any ambiguity. We also do not find any inconsistencies in the words ....
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.... without the payment of taxes on the returned income, this would defeat the very purpose of the amendment to section 249(4)(a) of the Act which is with effect from 1-4-1989. It is a rule now firmly established that the intention of the Legislature must be found by reading the statute as a whole. It is also an established rule of law that a statute or any enacting provisions therein must be so construed as to make it effective and operative. A statute is designed to be workable, and the interpretation thereof by a Court should be to secure the object unless crucial omissions or clear directions make that end unattainable. It has been held by the Courts that a construction which fails to achieve the manifest purpose of the Legislature should be avoided otherwise it would reduce the legislation to futility. In the present case, the intention of the Legislature is quite plain, i.e., to collect the taxes at least on the basis of returned income before filing the appeal. But if the appeal filed without making the payment of tax on the basis of returned income is to be taken as maintainable, it would defeat the obvious intention of the Legislature to force the collection of lawful t....
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....etation of taxing laws in the language of Bhagwati J, as follow: "In construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law. If the revenue satisfies the Court that the case falls strictly within the provisions of tax law, the subject can be taxed. If on the other hand, the case is not covered within the four comers of the provisions of taxing statute, no tax can be imposed by inference or by analogy or by trying to prove into the intention of the Legislature and by considering what was the substance of the matter." Similarly, the Honourable Supreme Court in the case of CSTv. Modi Sugar Mills AIR 1961 SC 1047, has enunciated the principle of interpretation of taxing laws at page 1051 in the language of Shah J, as follow: "In interpreting a taxing statute, equitable consideration are entirely out of place. Nor can taxing statute be interpreted on any presumptions or assumptions. The Court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import p....
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....e section and it is capable only to one interpretation that the tax must be paid on the returned income before filing the appeal. In view of the aforesaid discussion, we do not find any infirmity with the order of the learned CIT(A) and the same is upheld. 21. The various court cases relied upon by the learned counsel have no application to the facts of the present case. In the case of Filmistan Ltd. as per the provisions of section 30 of the Indian Income-tax Act 1922, there was a discretion with the Appellate Assistant Commissioner to admit an appeal after the expiration of period if he was satisfied that the appellant had sufficient cause for not presenting it within that period. The Honourable Supreme Court held that "If, for instance, the memorandum of appeal is filed on 20th day, i.e. 10 days before the period of limitation expires and the tax is paid within the rest 10 days, the appeal will be proper appeal, it will be within time and no question of limitation will arise but if the tax is paid even though the memorandum of appeal was presented earlier and within the period of limitation, the question will then have to be decided whether there was sufficient cause for cond....
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.... facts of the present case. The above case has been decided prior to the amendment to section 249(4)(a) of the Act. Section 249(4)(a) was amended with effect from 1-4-1989 and thereafter the provisions of section 249(4)(a) became mandatory. Under the new provisions, if the assessee wants to get his appeal admitted by the first appellate authority, he must comply with the mandatory requirement of the provisions of section 249(4)(a) by making the payments of the tax on the returned income before filing the appeal. On failure of the assessee to comply with the requirement, the first appellate authority is competent not to admit the appeal. Therefore, this case is also not relevant because the same pertains to the period prior to amendment when the CIT(A) was having discretion under the provisions of the proviso to section 249(4) for the admission of the appeal even if the taxes were not paid on the returned income if he was satisfied that the assessee had good and sufficient reasons for not making the payments of tax. The case of Gopalchand Khandelwal of Delhi Bench of the Tribunal is not relevant to the issue involved in the present case. The issue involved in that case whether in vi....