Income Tax Appellate Tribunal - Hyderabad
D.S. Karunakar Reddy, Hyderabad, ... vs Dcit, Central Circle-6, Hyd, Hyderabad on 14 February, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "A", HYDERABAD
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND
SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
I.T.A. No. 4/HYD/2016
Assessment Year: 2008-09
D.S. Karunakar Reddy, Additional Commissioner
HYDERABAD Vs of Income Tax,
[PAN: AHCPC0573C] Range-13,
HYDERABAD
(Appellant) (Respondent)
For Assessee : Shri A.V. Raghu Ram, AR
For Revenue : Shri J. Siri Kumar, DR
Date of Hearing : 25-01-2018
Date of Pronouncement : 14-02-2018
ORDER
PER B. RAMAKOTAIAH, A.M. :
This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-4, Hyderabad, dated 29-09-2015. The appeal was filed with a delay of 19 days. After considering the affidavit of assessee, and the arguments of Ld.DR, the delay in filing the appeal is hereby condoned as assessee has sufficient cause in filing the appeal belatedly. The appeal is admitted.
I.T.A. No. 4/Hyd/2016 :- 2 -:
2. Briefly stated, there was search and seizure operations u/s. 132 of the Income Tax Act [Act] conducted on the residential premises of assessee on 17-10-2007. For the AY. 2008-09, assessee filed return of income disclosing total income at Rs. 61,38,410/-. In the assessment completed u/s.
143(3) dt. 31-12-2009, AO disallowed the expenditure claims to an extent of Rs. 28,20,847/- and also brought to tax the share of consideration received from M/s. Demi Realtos to an extent of Rs. 68,31,25,000/-. On appeal before the Ld.CIT(A)-1, Hyderabad, assessee's contentions were not considered and appeal was dismissed in limine invoking the provisions of Section 249(4)(a) of the Act by the Ld.CIT(A)-1 vide order dt. 07- 03-2011. On further appeal, assessee contended that he has paid the necessary taxes before the date of filing of appeal and what was remaining was only interest and such interest was also paid on 30-04-2010 i.e., before the appeal was dismissed by the CIT(A) and Ld.CIT(A) should have condoned the delay if it was treated as delay in filing the appeal.
3. The ITAT vide its order dt. 16-09-2011 has directed the CIT(A) to consider the issue as under:
"5. We have considered the rival submissions and perused the material available on record. We find merit in the contentions of the learned counsel for the assessee that the first appellate authority ought to have seen that the assessee already paid tax before the date of filing of appeal and what was remaining was only interest and such interest was also paid on 30-4-2010. We find that the provisions of section 249(4) of the Act categorically stipulate payment of admitted tax on the returned income as a pre-requisite and mandatory condition for admission of an appeal. This pre-condition was made applicable to all the appellate authorities. The provisions of section 249(4) of the Act, as they stand subsequent to 1.4.1989 do not leave any discretion in the appellate authority, since such a discretion I.T.A. No. 4/Hyd/2016 :- 3 -:
earlier vested in the appellate authorities was withdrawn by Direct Tax Laws (Amendment) Act, 1989 with effect from 1.4.1989. The undisputed fact that the assessee had paid entire tax and interest as on 30-4-2010 and the first appellate authority, in our considered view, should have condoned the delay in payment and disposed off the appeal on merit. After considering the totality of facts and the circumstances of the case, we are of the view that the issue before the CIT (A) should be decided on merits thereof and accordingly, the impugned order of the CIT (A) is set aside and matter is restored to his file with a direction to admit the appeal of the assessee, after taking on record the evidences of TDS (Corrected to 'Tax' vide M.A. No. 113/Hyd/15 - order being issued separately) deposited by the assessee and then to decide the appeal before him in accordance with law on merits thereof, after allowing reasonable opportunity of hearing to both the parties. We direct accordingly".
4. In the consequential proceedings, Ld.CIT(A) again dismissed the appeal by stating as under:
"6. I have carefully considered the assessment order, grounds of appeal, statement of facts, submissions made by the appellant during the course of appeal proceedings, the copies of CIT(A) order and also the order of the Hon'ble Tribunal. In this case, a search and seizure operation was conducted on 17/10/2007 at the residential premises of the appellant, consequent to which the appellant filed his return of income by declaring a total income of Rs.61,38,410/- on 16/10/2009 but without payment of taxes. As per the copy of the return of income filed, there is NIL advance tax payment, and NIL self assessment taxes paid by the appellant and the so the taxes payable were of Rs.27,52,870/-. This amount includes net tax of Rs.20,28,663/- and interest of Rs.7,24,206/-. The assessment u/s. 143(3) was completed by the AO on 31/12/2009 by arriving total tax of Rs.31,71,21,580/-. While taking the income as admitted in return, the AO wrongly adopted Rs.1,79,790/- instead of Rs.61,38,410/- as disclosed by the appellant. If this return of income is adopted, the taxes will work out still more, than as per the return of income adopted by the AO in the assessment order. Till the date of assessment order i.e. 31/12/009, the taxes were not paid by the appellant. The taxes were paid by the appellant after the date of assessment order, i.e. on 29/01/2010 of Rs. 20.28 lakhs and Rs.7.24 on 30/04/2010. The appeals were filed on 01/02/2010, that means an amount of Rs.20.28 lakhs paid before filing of the appeals leaving still a balance of Rs.7.24 lakhs. As on the date of assessment i.e. 31/12/2009, the interest will work out more than the interest of Rs.7.24 lakhs which is as on the date of filing of return. Therefore, If I.T.A. No. 4/Hyd/2016 :- 4 -:
we consider that the appellant paid the taxes and interest also as on 30/04/2010, then also still balance interest payable will remain by the appellant. Therefore, the appellant has tailed to pay the taxes as per Section 140A before filing of return and also failed to pay exact amount of taxes along with interest before filing the appeals. Therefore, the appellant has deferred as per Section 140A(3) and thereby the provisions of Section 249(4)A clearly attracts. As per the directions of the Hon'ble ITAT, it was verified and found that there is no evidence of TDS to admit the appeals of the appellant. All the amounts were either advance tax or self assessment taxes including interest which were not paid by the appellant. Still as on date there works out certain interest portion which has to be paid by the appellant by taking the completion of the assessment date, i.e. 31/12/2009. Hence, the appeal filed by the appellant were not admitted".
5. It was the contention of Ld. Counsel that assessee has correctly paid the taxes and also interest though not required by the time the appeal was considered for dismissal by the CIT(A)-1 earlier. It was further submitted that assessee is not aware how further taxes were to be paid as calculated by the Ld.CIT(A). It was submitted that as per the provisions of Section 249(4)(a), only admitted tax is to be paid and the admitted tax was already remitted, hence, CIT(A) should have considered the issue on merits.
6. Ld.DR, however, relied on the provisions of Section 140A(3) to submit that admitted tax includes interest also under the provisions of Section 140A and therefore, the order of CIT(A) is to be upheld.
7. We have considered the rival contentions and perused the documents placed on record. As already considered by the ITAT vide its order dt. 16-09-2011, the provisions of Section 249(4) of the Act categorically stipulate I.T.A. No. 4/Hyd/2016 :- 5 -:
the payment of admitted tax on the returned income as a pre- requisite and mandatory condition for admission of an appeal. It is also on record that assessee has paid entire admitted tax and also interest as on 30-04-2010. The ITAT also opined that the First Appellate Authority should have condoned the delay and should have disposed of appeal on merits. Inspite of clear directions on the issue, we are of the opinion that the CIT(A) has exceeded the jurisdiction and dismissed the appeal again in limine considering that assessee has not paid further interest, the calculation of which was not placed on record, nor assessee is aware about it.
7.1. The issue whether 'admitted tax' includes interest also is no longer in dispute. As per the provisions of Section 249(4), 'admitted tax' means only the tax component, which does not include interest. The Hon'ble Bombay High Court in the case of CIT Vs. Manoj Kumar Beriwal [316 ITR 218] (Bom) has held as under:
"The expression "tax" has been defined in section 2(43) of the Income-tax Act, 1961 and under the definition "tax" does not include interest which has been independently referred to under section 2(28)(a) of the Act. While considering the language of a section, the courts are bound to look at the definitions in the legislation for the purpose of interpreting and construing the expressions and words under the Act, the object being to avoid conflict and have a harmonious interpretation unless the context otherwise requires. For the purpose of section 249(4) of the Act, the deposit of tax, which is a condition precedent, does not include interest under sections 234B and 234C of the Act".
7.2. The Hon'ble Bombay High Court has considered the decision of the Hon'ble Supreme Court in the case of Harshad I.T.A. No. 4/Hyd/2016 :- 6 -:
Shantilal Mehta Vs. Custodian & Ors., [231 ITR 871] to take support in arriving at the above decision. There was no contrary decision to the above and accordingly, it is to be held that what is requisite u/s. 249(4) is only the payment of admitted tax, which obviously does not include interest. Even though assessee has paid interest also by 30-04-2010, non- payment of so called further interest does not disentitle assessee contending that appeal is maintainable. We are of the opinion that Ld.CIT(A), instead of deciding the appeal on merits as directed by the ITAT, took up a wrong issue in dismissing the appeal in limine again .
7.3. In the course of arguments, Ld.DR, relied on the provisions of Section 140A. The provisions of Section 140A are as under:
"Self-assessment Section 140A -
(1) Where any tax is payable on the basis of any return required to be furnished under [ [section 115WD or section 115WH or] section 139 or section 142 [or section 148 or [section 153A or], as the case may be, section 158BC]], [after taking into account, -
(i) the amount of tax, if any, already paid under any provision of this Act;
(ii) any tax deducted or collected at source;
(iii) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India;
(iv) any relief of tax claimed under section 90A on account of tax paid in any specified territory outside India referred to in that section; and I.T.A. No. 4/Hyd/2016 :- 7 -:
(v) any tax credit claimed to be set off in accordance with the provisions of section 115JAA [or section 115JD]] [the assessee shall be liable to pay such tax' together with interest [and fee] payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, before furnishing the return and the return shall be accompanied by proof of payment of such tax [and interest]].
[Explanation - Where the amount paid by the assessee under this sub-section falls short of the aggregate of the tax [and interest as aforesaid, the amount so paid shall first be adjusted towards] the interest payable as aforesaid and the balance, if any, shall be adjusted towards the tax payable.]"
Even in this section, the definition of tax and interest are separately considered. The explanation of 'assessed tax' as per the provisions of Section 140(1B) does not include the component of interest at all. The Provisions of Sub-section 1B also specifically says that interest payable u/s. 234B shall be computed on an amount equal to the 'assessed tax' or as the case may be on the amount by which the advance tax paid falls short of the 'assessed tax'. The words 'admitted tax' and 'assessed tax' in the context of Income Tax Act always refers to the tax component and does not include any interest or penalty which are levied separately and also specifically stated wherever they occur. In view of that, respectfully following the decision of the Hon'ble Bombay High Court in the case of CIT Vs. Manoj Kumar Beriwal (supra), we hold that the order of CIT(A) cannot be sustained. As assessee has paid the admitted tax, the appeal is maintainable before the CIT(A). Accordingly, I.T.A. No. 4/Hyd/2016 :- 8 -:
the order of CIT(A) is set aside and appeal is restored to the file of CIT(A) to consider that appeal on merits of grounds raised.
8. In the result, appeal of assessee is allowed for statistical purposes.
Order pronounced in the open court on 14th February, 2018 Sd/- Sd/-
(P. MADHAVI DEVI) (B. RAMAKOTAIAH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated 14th February, 2018
TNMM
I.T.A. No. 4/Hyd/2016
:- 9 -:
Copy to :
1. D.S. Karunakar Reddy, C/o. J. Prabhakar, Chartered Accountant, Residency Apartments, 245, T.T.K. Road, Alwar Pet, Chennai.
2. The Addl. Commissioner of Income Tax, Range-13, Hyderabad.
3. CIT(Appeals)-4, Hyderabad
4. CIT-4, Hyderabad.
5. D.R. ITAT, Hyderabad.
6. Guard File.