Income Tax Appellate Tribunal - Ahmedabad
Khushmanlal Hiralal Kansara vs Assistant Commissioner Of Income Tax. on 16 November, 1995
Equivalent citations: (1996)56TTJ(AHD)62
ORDER
B. L. CHHIBBER, A. M. :
The short but the important issue raised in this appeal by the assessee relates to maintainability of the appeal before the first appellate authority.
2. A raid was conducted at the residential premises of the assessee at Blue Diamond Chambers at 5/754 to 757, Haripura, Taratla, Hanuman Sheri, Surat on 24th Sept., 1987 and the statements recorded of the assessee as well as his nephew Shri Anilkumar T. Kansara under s. 132(4) of the IT Act. After scrutiny of the various papers seized during the course of search and other relevant materials, the Assessing Officer (AO) completed the assessment under s. 143(3) of the Act on 31st Dec., 1991 at an income of Rs. 23,05,050 as against the returned income of Rs. 86,840.
3. The assessee appealed before the CIT(A), Surat. In the grounds of appeal the assessee objected to the various additions made by the AO. Besides, the assessee objected to some observations made in the assessment order. The charging of interest under ss. 139(8) and 217 was also disputed in appeal. Initiation of penalty proceedings under various sections was also disputed in appeal. The CIT(A) noted that as per the provisions of s. 249(4)(a) as applicable w.e.f. 1st April, 1989 no appeal shall be admitted by the CIT(A), if at the time of filing of the appeal, the appellant had not paid the tax due on the income returned by him. Vide his letter dt. 30th Nov., 1992 filed before the CIT(A), the assessees counsel had stated that on the date of filing of the appeal under consideration the assessee had not paid the tax due on the income returned by him. It was further stated by the assessees counsel vide the said letter that the said omission had occurred since the assessee had not taken into account the share income from the firm while calculating his tax liability. It was submitted that the mistake of not paying the tax on the returned income was bona fide. It was prayed before the CIT(A) that the assessees lapse in not paying the tax on the returned income should be condoned and the appeal under consideration should be admitted. The CIT(A) was not satisfied with the submissions made and declined to entertain the appeal observing as under :
"It is relevant to note that as per the provisions of s. 249(4)(a) as applicable w.e.f. 1st April, 1989, it is laid down that no appeal shall be admitted by the CIT(A), unless at the time of the filing of appeal, the appellant had paid the tax due on the returned income. However, as has been discussed supra, on the date of filing of the appeal, the appellant has not paid the tax due on the returned income. In the circumstances, considering the express provisions of s. 249(4)(a), the appeal under consideration cannot be admitted. It is also relevant to note that w.e.f. 1st April, 1989, the CIT(A) does not have any power to condone the lapse of the non-payment of tax on the returned income. It is also relevant to note that the appeal under consideration has been filed on 3rd Feb., 1992, i.e., after 1st April, 1989. It is also relevant to note that the provision relating to s. 249(4)(a) is not an idle and a dispensable formality. It is an imperative obligation. As already mentioned, w.e.f. 1st April, 1989, the CIT(A) has not been given any power to condone the default or not complying with the provisions of s. 249(4)(a). It may be mentioned that being the creature of the IT Act, 1961, the CIT(A) has to function within the parameters of the said statute. Accordingly, it is held that the CIT(A) has to function within the framework of the IT Act, 1961. The CIT(A) cannot exercise the power which is not given to him. He does not have the power to transgress the limits placed by the said statute nor does he have the power to sit in judgment over the merits of the provisions of the statute. It is an established principle that the taxing statutes are to be strictly construed. In this connection, it is relevant to note that vide its judgment in CIT vs. T. V. Sundaram Iyengar & Son (P) Ltd. (1975) 101 ITR 764 (SC), the Supreme Court has laid down that if the language of the statute is clear and unambiguous, it would be wrong to discard the plain meaning of the words. Similar principle has been laid down by the Supreme Court in the judgments reported as CIT vs. Ajax Products Ltd. (1965) 55 ITR 741 (SC) and CIT vs. Sodra Devi (1957) 32 ITR 615 (SC). Considering the unequivocal and unambiguous wording of s. 249(4)(a), it is held that the CIT(A) does not have the power to admit the appeal under consideration. Considering the totality of the factual and legal position discussed supra, it is held that the appeal under consideration cannot be admitted. Therefore, the appeal stands dismissed as infructuous."
4. Shri S. N. Soparkar, the learned counsel for the assessee submitted that the CIT(A) failed to appreciate that though on the date of filing of the appeal some portion of the tax had remained unpaid, the same was paid soon thereafter and in any case much before the date of hearing of the appeal. The CIT(A) dismissed the appeal for non-payment of tax as per returned income on the date of filing of the appeal without noting the decision of the Calcutta High Court in the case of CIT vs. Bengal Card Board Industries & Printers (P) Ltd. (1989) 176 ITR 193 (Cal) which ruled in assessees favour that :
"Where, on the date of initiation of assessment proceedings, law permitted an appeal to be preferred without payment of admitted tax liability but subsequently if law is amended requiring deposit of entire amount of admitted liability before appeal is entertained, right of appeal in such a case should be governed by unamended law."
According to the assessees counsel when the ratio of above decision is applied to the assessees case it is seen that the assessees premises were raided on 24th Sept., 1987 and, therefore, the assessment proceedings are deemed to have been initiated on that date. The subsequent amendment of the statute w.e.f. 1st April, 1989 debarring appeal to be filed without payment of tax in full as per return of income is of no consequence to the assessee in view of the above decision. The learned counsel for the assessee, therefore, concluded that the CIT(A) ought to have condoned the bona fide lapse on the part of the assessee and admitted the appeal for adjudication.
5. The learned Departmental Representative strongly supported the order of the CIT(A). He submitted that it was a search case and during the course of search at the premises of the assessee a disclosure of Rs. 12 lakhs was made. No advance tax was paid nor any payment was made on account of self assessment. The tax was not paid even on returned income and accordingly the appeal was not maintainable in view of the provisions of s. 249(4)(a) brought on the statute book w.e.f. 1st April, 1989. The learned Departmental Representative submitted that the law on the issue was very clear and the CIT(A) was right in not entertaining the appeal.
6. We have considered the rival submissions and perused the facts on record. It will be worthwhile to reproduce the provisions of s. 249(4)(a) which was brought on the statute book w.e.f. 1st April, 1989 :
(4) No appeal under this chapter shall be admitted unless at the time of filing of the appeal, -
(a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or
(b) where no return has been filed by the assessee; the assessee has paid an amount equal to the amount of advance tax which was payable by him :
Provided that, in a case falling under cl. (b) and on an application made by the appellant in this behalf, the Dy. CIT(A) or as the case may be, the CIT(A) may, for any good and sufficient reason to be recorded in writing exempt him from the operation of the provisions of that clause."
There is no dispute that the assessee had not paid tax on the returned income before filing of the appeal on 3rd Feb., 1992 nor any advance tax or tax on account of self assessment had been paid by the assessee. As such the provisions of s. 249(4)(a) are clearly attracted in the case of the assessee. It may be submitted that s. 249(4)(a) was brought on the statute book with a specific purpose of discouraging the assessee from withholding tax due on the returned income by filing an appeal before the concerned authority; in other words intention behind this provision was encouraging tax compliance. These provisions must be interpreted in consonance with the avowed aims and objects of the legislature in enacting this provision and to further these and not to defeat these. Being the creature of the IT Act, 1961, the CIT(A) has to function within 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.
6.1 Reliance placed by the assessees counsel on the judgment of the Calcutta High Court in the case of Bengal Card Board Industries & Printers (P) Ltd. (supra) is of no assistance to the assessee, as the facts are distinguishable. In the case before the Calcutta High Court the assessment under s. 143(3) was completed on 31st July, 1975. The assessee preferred appeal to the AAC on 9th Oct., 1975. Sub-s. (4) in s. 249 requiring payment of undisputed tax before filing of the appeal had been inserted w.e.f. 1st Oct., 1975. Undisputed tax was not paid before filing of appeal. On these facts the Calcutta High Court held that an appeal is a continuation of the original proceedings and right to prefer an appeal accrued when notice under s. 143(2) was issued or in any event when assessment was made on 31st July, 1975 prior to 1st Oct., 1975 when the amendment came into force. Accordingly the Honble Calcutta High Court held that law as stood prior to 1st Oct., 1975 governed the case and appeal was maintainable. In the case before us the return of income was filed on 21st March, 1991 and the assessment proceedings started with the issue of notice under s. 143(2) thereafter, i.e., much after 1st April, 1989 when the amended provisions of s. 249(4)(a) came into effect. We do not agree with the contention of the assessees counsel that the assessment proceedings started with the search at the assessees premises on 24th Sept., 1987 because such an interpretation will produce a manifestly absurd and unjust result which could never have been intended by the legislature. We accordingly reject the contention of the assessees counsel and concur with the finding of the CIT(A).
7. In the result, the appeal is dismissed.