2010 (9) TMI 385 - HC - Income Tax

Condonation of Delay - Section 249(4) of the Income Tax Act, 1961 - Whether on the facts and in the circumstances of the case, and in law, the Hon ble Tribunal was right in holding that Section 249(4) is to be so construed to mean that there is absolute bar to right of appeal in a case where the assessee has not paid the entire self assessment tax at the time of filing of the appeal, even if the said assessment tax is paid soon after filing the appeal and before the hearing of the appeal has taken place The meaning of the words no appeal shall lie in the proviso is not that no memorandum of Appeal can be presented and all that it mean is that the Appeal will not be held to be properly filed until the tax has been paid. Applying the said principles laid down by the Apex Court to the facts of the instant case, the Appeal as filed by the Appellant on 24.3.2000 can be said to be filed on 31.3.2000, when the payment of the balance self assessment tax was made by the Appellant- The impugned order would have to be set aside and the question of law would have to be answered in favour of the Assessee and against the Revenue Tribunal has also erred in mixing up the issue of condonation of delay in filing the appeal, with the issue of condonation of delay in paying the tax. The said issues could not have been mixed up by the Tribunal in the teeth of Section 249(3) of the said Act. It has to be borne in mind that a right of appeal is an important right provided under the Act and, therefore, any interpretation which whittles down such a right should be strictly avoided. - Decided in favor of assessee - appeal filed by the Appellant before the CIT (Appeals) restored.

Summary

Issues Involved:
Challenge to order of Income Tax Appellate Tribunal under Section 249(4) of Income Tax Act, 1961 - Interpretation of Section 249(4) regarding right of appeal based on payment of self-assessment tax - Application for condonation of delay in filing appeal - Mixing up of issues regarding delay in filing appeal and delay in paying tax.

Detailed Analysis:

Issue 1: Challenge to Order of Income Tax Appellate Tribunal under Section 249(4)
The appeal filed challenged the order of the Income Tax Appellate Tribunal which held the appeal as not maintainable under Section 249(4) of the Income Tax Act, 1961. The substantial question of law raised was whether Section 249(4) bars the right of appeal if the assessee has not paid the entire self-assessment tax at the time of filing the appeal, even if the tax is paid before the appeal hearing.

Issue 2: Interpretation of Section 249(4) regarding Right of Appeal
The appellant, in this case, failed to pay the entire self-assessment tax at the time of filing the appeal, although the balance tax was paid soon after filing the appeal. The dispute centered around the interpretation of Section 249(4) and whether the right of appeal is absolute or can be maintained if the tax is paid before the appeal hearing.

Issue 3: Application for Condonation of Delay in Filing Appeal
The appellant requested condonation of delay in filing the appeal, arguing that the tax payment date should be considered as the filing date of the appeal. The appellant relied on precedents and contended that the First Appellate Authority has the power to condone the delay under Section 249(3) if sufficient reasons are presented.

Issue 4: Mixing up of Issues Regarding Delay in Filing Appeal and Delay in Paying Tax
The Tribunal erroneously mixed up the issues of condonation of delay in filing the appeal and delay in paying tax. The Tribunal failed to consider the specific provision of condonation of delay under Section 249(3) and wrongly rejected the application as not maintainable under Section 249(4).

Conclusion:
The High Court set aside the impugned order and ruled in favor of the appellant. The court emphasized the importance of the right of appeal and directed the restoration of the appeal before the CIT (Appeals). The appellant was granted the opportunity to file a representation for condonation of delay, and the Commissioner was instructed to decide on the application within a specified timeline. The court highlighted the need to avoid interpretations that diminish the right of appeal and stressed the importance of a fair consideration of condonation of delay applications.