Karnataka High Court
Commissioner Of Income Tax-Iii vs Sri K Satish Kumar Singh on 13 February, 2012
Bench: N.Kumar, Ravi Malimath
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Fae ot
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 13™ DAY OF FEBRUARY, 2012
PRESENT |
THE HON'BLE MR.JUSTICE RAVI MALIMATH
INCOME TAX APPEAL NO.361 OF 2011
BETWEEN:
1, COMMISSIONER OF INCOME TAX: a
REVENUE. BUILDINGS mS
QUEENS ROAD.
BANGALORE - ~ S40 ot.
2. THE ADDITIONAL COMMISSIONER OF
INCOME TAX, + RANGE-9
BY s SKI: EI 1 SANMATHL, ADVOCATE)
ATA Mir COURT OF RARMATAIA SIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH
SRI kK SATISH KUMAR SINGH
_ NO.132/2, SOUTH PARK ROAD
NEHRU. NAGAR, BANGALORE. .. RESPONDENT
--. 'THIS INCOME TAX APPEAL UNDER SECTION 260-A OF
\_ THE INCOME TAX ACT, 1961, ARISE OUT OF THE ORDER
... DATED 13.5.2011 PASSED IN ITA NO. 1176/BANG/2010 FOR
_ THE ASSESSMENT YEAR 2007-08, PRAYING TO FORMULATE
._ «THE SUBSTANTIAL QUESTIONS OF LAW AND SET ASIDE THE
COMMON APPELLATE ORDER DATED 13.5.2011 PASSED BY
THE ITAT, 'B' BENCH, BANGALORE, IN ITA
an a
MOUET OF KARNATARA Hie
Pod
GH ¢
SH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA Hi
NO.1176/BANG/2010 AS SOUGHT FOR IN THIS APPEAL, IN
THE INTEREST OF JUSTICE AND EQUITY.
THIS INCOME TAX APPEAL COMING ON FOR
ADMISSION THIS DAY, ¥. KUMAR, J., DELIVERED. THE
FOLLOWING:- |
The Revenue has preferred | this appeal s against the
order passed by the Tribunal allowing the appeal filed
by the assessee, set aside the order 'passed by the
Appellate Authority rejecting the application filed by the
assessee to recall 'the order dismissing the appeal in
limine for | -non-paymen nt of admitted tax.
2. wh enseadoe is ant individual, He is carrying on
the business of real estate as @ land developer. For the
'asoewsment year 2007-08, he filed his return of income
a1. 10. 2007 disclosing the income of %2,49,87,100/-.
Ne The return was processed under Section 143({1) of the
_ Income Tax Act (for short, hereinafter referred to as, 'the
_ Act] and a demand of %06,64,935/- was raised.
a Subsequently, there was a survey conducted in the
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bers ee
MUSE Oe
OF ARM ATAIA
gee
HH COURT
4
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4 AER COURT GF RARNATARA Hic
business premises of the assessee on 27. 6.2908.
During the survey, it was noticed that the asseesce had.
debited a sum of %7,55,85,800/- for the asseasment |
year 2006-07, and %6,46,86 ,000/ - for the assessment :
year 2007-08 towards the earth. filing « chargea in
Kasavanahalli Project. It was noticed that. the aasessce
had incurred these expenses 'through 'self-made
vouchers on land levelling. Since 'the Asseasing
Authority doubted the incurring of these expenses, the
matter was referred to the District Valuation Officer to
find out. the actual costs: of developmental expenses
incurred. "The District 'Valuation Officer valued the
7 developmental expenses to the tune of %9,30,000/- for
'both the assessment years. Based on the Valuation
| Report, the 'Assessing Authority allowed a sum of
- 84,27,800)- on proportionate basis as developmental
7 expenses and proceeded to make an addition of
%, 42,58,200/-. The asseasee objected to the said
assessment. However, his objections were over-ruled
=
"H COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAIA and the assessment was completed under Section 143(3) of the Act, by an order dated 31.5.2009, S determining the total taxable income at 9 02 68 s100/-.
Aggrieved by the assessment order, | the _aszessee ; preferred an appeal to the Firat Appellate authority | Before the First Appellate Authority, the assessee admitted the income of £2, 19, 87, 200/- as per the return of income filed by him. He did not pay any tax on the said admitted income, a 'Therefore, 'the appeal war rejected in imine under Section 24914) of the Act. Aggrieved. by the seid order, the assessee preferred an appeal to the Tribunal. In the Paper Book filed before . the Tribunal, copten of the challans evidencing the payment of admitted tax for the concerned assessment
-- years and copiva of the petition for recalling the order of oN the First Appellate Authority in dismissing the appeal in . "imine end also a copy of the letter of the First Appellate
- Authority rejecting the asseasee's application to recall
- the order of the First Appellate Authority which has _-
dismissed the assessee's appeal in limine were produced. It was submitted before the Tribunal that the 7 assessee has paid the entire tax on the admitted income ie | and the same is evidenced from the challene produced | :
which is running from pages 1 to 6 of the Paper Book. It was also submitted that assexsee had moved an application before the Appellate Author: y to recall the LOM! OP RARSATAKA HGH COURT OF KARNATAKA Hih Cc ake impugned order. The said epplication \ was rejected by Lt the Appellate Authority vide its letter dated 23.11.2010. Relying on @ judgment of this Court, it was contended before the Tribunat that the aasessee's request to recall the order of diamissing the appeal in limine should have Pa we :
ca at as < on aE a Bat a <4 % we hee a ue ¥ al a A ¥ . heen alowed. The Trivunel, on consideration of the aforeaaid facts and the rival contentions, after noticing | the challans evidencing payment of admitted tax, was of \ tte view thet the matter should be remitted back to the | ». Appellate Authority, who shall verify whether the entire _ admitted tax has been paid and if eo, he shall decide the _-
SH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH cas¢ on merits. Aggrieved by the said order,- the Revenue is in appeal.
that once the admitted tax Liability i ia "not paid, co appeal preferred is not maintainable and the Appellate Authority has no jurisdiction to . entertain the appeal. Therefore, the order passed by the First Appellate Authority dieminsing the eppeal is liniine is legal and valid. If the admitted tax 13 paid subsequent to the said order, that isn not a ground for setting aside the order by the First Appellate Authority. Therefore, he submits that the entire approach of the Tribunal is incorrect and ~ requires tobe set aside.
i. 4, Section 249 of the Act deals with form of appeal "and limitation. Sub-Section (4) of Section 249 of the Act reads as under:
'No appeal under this Chapter shall be admitied unless at the time of filing of the appeal,-
high Te OURT OF KARNATARA eg he ce Feed on pt ee x af e feos <E ra aa of, ii 4 tbe bow x at Psy bea?
ry ot bon By i io a 2s x "
ae dos oe oe on = "sy ia wa wes * ww 4 3 g ves
a) Where a return has been filed by the assesses, the assesses has paid the tax due on the income returned by him; or
b) Where no retum has been fica by ythe .
A88@8S868, the assesses has paid an amount a equal to the amount of advance ied iwhich was _ payable by him:
Provided that in a case fulling under Clause-(b} and on an application made by the appellant in this behalf. the Commissioner (Appeals) mos, for any good and sufficient reasor: to be recorded in writing, exempt hom frem the operation of the provisions of. thst. cloutse. Therefore, from the aforesaid provision, it is clear when the return has , been filed by the aseessee, unless ™, nn a the assessec pays the admitted tax due on the income _ Fetumed by bl, no appeal shall be entertained and admitted. 'Therefore, if admitted tax is not paid which . falls under Clause-(a) of Sub-Section 4 of Section 249 of the Act, the Commissioner (Appeals) is not vested with mS any power to waive payment of such admitted tax and \ "SH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT G2 RARNATARA SIGH COURT OF KARNATAKA BIGH COURT OF KARNATAKA SEEM entertain the appeal. The order of dismissing the appeal in such circumstances is automatic. Therefore, the appeal dismissed under Clause-(a) of Sub-Sertion 4 of : ms Section 249 of the Act for non-payment of adinitied tax :
due on the income returned by the asacasee. cannot be : found fault with. However, if after such diemissel, if the assessee pays the admitted tax. cand "requests the Appellate Authority to recall 'the order dismissing the appeal in limine end to consider the tippeal on merits under the aforesaid provision OF "under any other provision. of the Act, there is no prohibition or legal impediment: for the Appellate Authority to recall ite . earlier order and entertain the appeal and decide the 'came on merits. 7
8. The Apex Court in the case of VIJAYA PRAKASH op. MEHTA & ANR. V/S. COLLECTOR OF CUSTOMS Ns : "reported in (1989} 175 ITR 540 (SC) dealing with the ws - - eimilar provisions under the Customs Act has held that
- the right of appeal is neither an absolute right nor an h--
HES Ce "4 A << oo <f = oe af at Me ae & Be be ra 'a 18
-
ft Sng < a ra eZ 2 aes be be oe = o me vata io CURT OF KAR ATOR a AOA EGE ingredient of natural justice, the principles of which must be followed in all judicial and quasi-j jude: ial b adjudications. The right of appeal is a statutory ight - | and it can be circumscribed by the conditions: an "the grant. It is not the law that adjudication by itesti, | following the rules of natural justice, would be violative of any right, constitutional or stat atory without ary right of appeal, as such. _If the s statute gives a right to appeal upon certaiz: conditions, i it is. : upon fulfillment of those conditions thet the right becomes vested in, and exercisable by the appellant. If discretion is vested, then there. is. ati n obligation to act judicially and properly.
- The pe STpose of such restriction is to act in terrorem to 'maake the people comply with the provisions of law.
| Therefore, the object of stipulating conditions such as ; ve demand of admitted tax is a condition precedent for | a "entertaining the appeals and admitting the appeals is to _ 7 see that the appellant obeys the law. Though the right of appeal is conferred under a statute, the said right is 10 subjected to the restrictions imposed under the very Same statute. There cannot be any absolute right dehorse the provisions of the statute. Therefore, in the. : os, instant case, the statute has conferred & right of appeal. :
MARMATARA bOGH COURT OF K. It algo in unequivocal terms expressly as stated that in | cases where the assessee files a. return and admits the liability to pay tax on the income. vretumed, unless he MOOURT O6 a pays the said admitted tax due on 1 the income returned, he may not exercise the stotutory right of appeal. As is clear from Clause ib) of Sub-ection 4 of Section 249 of the Act in all cases falling under Sub-Section 4 of Section 249, no discretion is vested with the Appellate
- Author ity. 'Therefore, in cases falling under Clause-(a) | 'of Sub-Section 4 of Section 249 of the Act, if the said | condition is | net fulfilled by the assessee, the appeal ; shall not be admitted and the only order that can be a _peases is dismissal of the appeal in limine. Keeping in oS - mind, the object with which these provisions are oe, introduced, once the assessee realises his obligations | --
WUERT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT GF KARNATAKA RIC Tet § & HIGH COURT OF KARNATAKA HIGH C¢ Boa = feo = x es <i cal bie oe few a ot cs al Sd 8 ob Pan 11 under the Statute, the purpose with which these provisions in terrorem are introduced under. r the Act, 7 obeys the statutory obligations, pays the tax, , then he. ; - may not be denied the right of appeal which 'the Statute :
has provided to him. In the absence of any express -
words circumscribing the powers of the Tribunal, the Tribunal has the ample power te recall its earlier order dismissing the appeal in. imine and to ear the appeal on merits. if the: 'ecimitted tex had been paid, the Appellate Authority ought to have admitted the appeal and hear the appeal on. merits. Of course, while recalling the onder, iti is open to the authority to find out
- whether the said application is made bona fide, is there | eny, unreasonable delay in approaching the Tribunal | and other mater, But once the conduct of the
-- essessee is n is not such as to disentitle him to exercise his oe 'right of appeal by obeying the law, that is by depositing | a "the admitted tax liability, the Appellate Authority should s "be liberal in entertaining these applications and hear _ TEE MURE VP RARNALABRA PIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF RARNATAKA HIGH 12 the appeal on merits and pass appropriate orders, in accordance with law. In the light of what we have . stated, the order passed by the Tribunal cann ot be. 7 KM