Karnataka High Court
D. Komalakshi vs The Dy. Commissioner Of Income Tax on 8 November, 2006
Equivalent citations: (2007)209CTR(KAR)70, [2007]292ITR99(KAR), [2007]292ITR99(KARN)
Author: R. Gururajan
Bench: R. Gururajan, N. Ananda
JUDGMENT R. Gururajan , J.
1. Both these appeals are taken up together for hearing and we pass a common order since the facts, grounds and questions of law involved in both these appeals are same or similar.
2. ITA No. 768/2006 is filed by Smt D. Komalakshi and ITA No. 769/2006 is filed by Sri D. Rajkumar. They are husband and wife.
3. The premises of the husband Sri D. Rajkumar was searched by the Department under Section 132 of the Income Tax Act (for short, 'the Act'). Thereafter, notices under Section 158BC of the Act were issued to the assessees namely Smt. D. Komalakshi and Sri D. Rajkumar. In response to these notices, both the appellants filed returns. Smt D. Komalakshi filed her return, declaring Rs. 19,32,838/-as total undisclosed income for the block period. As per the returns, the total tax payable was declared to be Rs. 11,82,896/-, including surcharge. In the connected appeal, the husband-Sri D. Rajkumar declared Rs. 1,07,96,536/- as total undisclosed income for the said block period. As per his return, the total tax payable was declared to be Rs. 66,07,480/-, including surcharge. The Assessing Officer gave credit for a sum of Rs. 53,00,000/-. which was seized during the course of search. The balance tax due from Sri D. Rajkumar was Rs. 13,07,480/-. The Assessing Officer concluded the block assessment of the appellant Smt. D. Komalakshi and determined the total undisclosed income at Rs. 83,19,650/-.
4. In ITA No. 769/2006, the Assessing Officer concluded the block assessment of the husband-appellant and determined the total undisclosed income at Rs. 4,64,85,100/- and the tax payable at Rs. 2,78,91,060/-. Both the appellants filed appeals before the Commissioner. The Commissioner (Appeals) rejected the appeals on the ground of maintainability in the light of Section 249(4) of the Act Aggrieved by the orders passed by the Commissioner/Appellate Authority, appeals were filed before the Tribunal. The Tribunal by a common order accepted the order of the Commissioner. This common order is challenged by both Smt. D. Komalakshi and Sri D. Rajkumar in these two appeals.
5. Sri A. Shankar, learned Counsel for the assessees would take us through the material on record to say that the Commissioner and the Tribunal have committed serious errors in rejecting the appeals as not maintainable in terms of Section 249(4) of the Act. He would say that in the case on hand, there is no admitted fact as such. On the other hand, tax liability itself is challenged by the appellants. He also says that even the search operation carried out under Section 132 of the Act is bad in law and ab-initio void. He would also say that the very jurisdiction of proceeding under Section 158BC of the Act was questioned and therefore, there is no admitted tax liability under Section 249(4)(a) of the Act. He would also strongly rely on a Judgment of this Court, reported in 231 ITR 892. He would also rely on a Judgment of the Supreme Court, reported in 187 ITR 688.
6. After hearing, we have carefully perused the material on record.
7. Both the appellants have filed return after the search and seizure in terms of the material on record. The returns were considered by the Assessing Officer and thereafter, adverse orders were passed by him. When the same were challenged before the Appellate Commissioner, the Appellate Commissioner by a detailed order, has chosen to hold that the appeals filed by the assessees are not maintainable in terms of Section 249(4) of the Act When the same was challenged before the Tribunal, the Tribunal has accepted the order passed by the Commissioner.
8. Thus, we have to see as to whether the order of the Commissioner, confirmed in the appeal before the Tribunal is sustainable or not in terms of the material placed before us or in terms of the submission made by the learned Counsel for the assessees.
9. Section 249 of the Act provides for 'Form of appeal and limitation'. Section 249(4) of the Act would provide for payment of the tax due on the income returned by him for the purpose of admission of the appeal. The said section would read as under:
249(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 essessee, 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 Clause (b) and] on an application made by the appellant in this behalf, the (***) (Commissioner (Appeals)] may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of [that clause)]
10. A reading of this section makes it very clear to us that admission of an appeal is subject to payment of tax due on the income returned and the same has been introduced, probably in the larger interest of the revenue collection by way of payment of admitted tax for the purpose of appeal. It is clear to us that the Commissioner (Appeals), after noticing the material aspects of the matter, has come to the conclusion that appeal is not maintainable and therefore, not admitted the appeal as per the provisions of Section 249A of the Act.
11. When the order passed by the Commissioner (Appeals) was challenged before the Tribunal, the Tribunal has accepted the order of the Commissioner. From a reading of the order of the Commissioner and the Tribunal, it is clear to us that tax due at the time of filing of appeal was not made over in terms of Section 249A of the Act, It is also to be noticed at this stage by us that the appellants, in terms of the material on record have chosen say that in unmistakable terms that they did not have any source to raise funds to make good tax due at the time of filing the appeal. They have further stated in their statement of objections that in terms of Section 249A of the Act, the appeal cannot be admitted in the absence of tax on the admitted income. This very statement of the appellants before the authority would go to show that the appellants have failed even according to them to comply with the mandatory requirement of Section-249A of the Act. Under the facts of the case and in the given circumstances, we are satisfied that there exist no legal errors either in the order of the Commissioner or in the Order of the Tribunal. The orders are therefore, accepted by us in the case on hand, particularly, in the light of the admitted facts in terms of the return and in terms of the submission as we see from the material on record. Under the circumstances, we bold that both the appeals are liable to be rejected by answering the questions of law against the assessee.
12. At this stage, Sri. A. Shankar, learned Counsel for the assessees would say that he would advise his clients to make good the admitted tax in terms of the returns filed by them for the purpose of consideration of appeals, for which, be wants some breathing time for making such payment.
13. In the normal course, we would not have considered such request from the assessee. However, taking into consideration the facts and circumstances of the case, we deem it proper to accept the submission made by the learned Counsel for the assessees. We therefore, give him four (4) weeks tune to make over admitted amounts before the authority. If payment is made by the assesses-appellants in terms of this order, the Commissioner (Appeals) shall consider the appeals on merits and pass appropriate orders in accordance with law, without in any way being influenced by the earlier proceedings. No opinion on merits is expressed by us. All contentions of either of the parties are left open. Ordered accordingly. No costs.