2012 (5) TMI 712 - AT - Income Tax

Default of non-payment of taxes due on the returned income - Form of appeal and limitation - Held that - This is a case of deemed payment. In the situation, to our mind, the expression paid used in the Act is inclusive of all kinds of payments including deemed payment , if any, and that being so, the case of the assessee must be considered as covered by the said expression and consequently, assessee must be deemed to have paid the taxes due on the income returned by him for the years under appeal. It is trite law that right of appeal is a precious right, which must be protected and should not be taken away from the assessee for the reasons discussed by the authorities below. Therefore, we are of the opinion that the impugned orders of the CIT(A) are required to be reversed. We accordingly set aside the impugned orders of the CIT(A) for both the years, and restore these matters to the file of the CIT(A), with a direction to condone the delay in the payment of taxes on admitted income by the assessee, which has taken place only on account of late adjustment of cash seized at the time of search, by the Revenue towards the taxes due from the assessee for the years under appeal, and proceed to dispose off the appeals for both he appeals before him afresh on merits in accordance with law and after giving reasonable opportunity of hearing to the assessee.

Summary

Issues:
Appeals against orders of Commissioner of Income-tax(Appeals) for default of non-payment of taxes due on returned income - Request for adjustment of seized cash towards tax liability - Interpretation of provisions of S.249(4)(a) - Right of appeal - Delay in payment of taxes.

Analysis:
The appeals were filed against orders of the Commissioner of Income-tax(Appeals) for default of non-payment of taxes due on returned income. The main issue revolved around the request made by the assessee for the adjustment of seized cash towards tax liability. The assessee argued that the Department did not adjust the seized cash towards taxes due, leading to the creation of tax demand. The Commissioner dismissed the appeals citing the provisions of S.249(4) of the Act, stating he lacked authority to condone the delay in tax payment. The Departmental Representative supported the Commissioner's orders, despite the undisputed fact of seized cash with the Revenue.

Upon hearing both parties and examining the facts, the Tribunal found that the seized cash was not adjusted towards taxes due, despite the assessee's request. Referring to relevant Tribunal decisions, it was established that seized cash could be adjusted against tax liability. The Tribunal interpreted S.249(4)(a) to include deemed payments, considering the assessee's request as a form of payment towards the taxes due on the returned income. The Tribunal emphasized the importance of protecting the right of appeal and reversed the Commissioner's orders, directing a fresh adjudication on the merits of the issues raised by the assessee.

The Tribunal held that the delay in tax payment was solely due to the late adjustment of seized cash by the Revenue, and not the fault of the assessee. Therefore, the Tribunal allowed the appeals for statistical purposes, setting aside the Commissioner's orders and restoring the matters for fresh adjudication. The Tribunal refrained from delving into the merits of other grounds, focusing solely on the issue of delayed tax payment and the right of appeal.

In conclusion, the Tribunal's decision highlighted the significance of protecting the right of appeal and ensuring fair treatment of the assessee in cases of delayed tax payment due to the Revenue's inaction. The judgment clarified the interpretation of relevant provisions and emphasized the need for a just resolution in tax matters.