2014 (11) TMI 344 - AT - Income Tax

Maintainability of appeal u/s 249(4) Admission of appeal - Payment of Admitted tax made or not Held that - The only requirement of section 249(4) is payment of tax due on returned income and there is no time limit prescribed for payment of such taxes - The CIT(A) can use his discretionary power and admit the appeal if he is satisfied about the liquidity crunch or any other reasonable cause for non-payment of taxes - sub-section (4) of section 249 pertains to those assessees who have defaulted in payment of tax or did not file the return - as per section 249(4) of the Act no appeal before CIT(A) should be admitted unless at the time of filing of the appeal, where a return has been filed by the assessee, tax due on the income returned has been paid - In this sub-section, there is a clause (b) which is in respect of a condition where no return at all has been filed by the assessee - A Proviso underneath the section also prescribes that the cases falling under the said clause (b), the CIT(A) can grant exemption from the operation of the clause - An inference can be drawn on combined reading of both the sub-clauses of sub-section (4) of section 249 that in case of default of non-payment of tax an appeal is not to be admitted, but on removal of the defect of non-payment of tax an appeal deserves to be admitted and in one of the condition the assessee can be granted exemption by the CIT(A) thus, the order of the CIT(A) is set aside and remanded back with a direction to admit the appeal Decided in favour of assessee.

Summary

Issues Involved:
- Admissibility of appeals before CIT(A) under Section 249(4) of the IT Act, 1961 based on payment of due tax.
- Classification of income under normal provisions of the Income Tax Act.
- Treatment of gain arising from the transfer of capital asset as assessable under the head "Income from Business."

Issue 1: Admissibility of appeals before CIT(A) under Section 249(4) of the IT Act, 1961 based on payment of due tax:

The appeals by various assessees were directed against separate orders of the CIT(A)-VII, Hyderabad for A.Y. 2008-09. The Tribunal noted that since the issues in these appeals were identical, they were clubbed and heard together for convenience. The CIT(A) observed that in accordance with Section 249(4) of the IT Act, an appeal cannot be admitted unless the tax due on the income returned has been paid at the time of filing the appeal. Citing judicial precedents, the CIT(A) dismissed the appeals of the assessees for non-compliance with this statutory requirement. The Tribunal, after considering the arguments and legal provisions, set aside the CIT(A)'s order and remanded the matter back to the CIT(A) for admitting the appeals and adjudicating on the issues afresh. The Tribunal highlighted the discretionary power of the CIT(A) to exempt an assessee from the operation of Section 249(4) based on reasonable causes for non-payment of taxes.

Issue 2: Classification of income under normal provisions of the Income Tax Act:

In the case under consideration, the assessee had initially offered income under capital gains in its return arising from the sale of land. However, the Assessing Officer computed the income under the head "Income from business/profession." The CIT(A) upheld this classification, leading to the assessee's appeal. The appeal raised concerns about the treatment of income under normal provisions when the returned income was "NIL." The Tribunal analyzed relevant case laws and provisions to determine the correct classification of income. The Tribunal directed the CIT(A) to re-adjudicate the appeals on their merits after giving the assessee a reasonable opportunity of hearing.

Issue 3: Treatment of gain arising from the transfer of capital asset as assessable under the head "Income from Business":

The assessee contested the Assessing Officer's decision to assess the gain arising from the transfer of agricultural land to a subsidiary company under the head "Income from Business." The CIT(A) upheld this decision, leading to the appeal before the Tribunal. The Tribunal reviewed the arguments presented by the assessee and the legal framework governing such assessments. After considering the facts and legal provisions, the Tribunal remanded the appeals back to the CIT(A) for fresh adjudication, emphasizing the need for a thorough examination of the issue and a decision in accordance with the law.

In conclusion, the Appellate Tribunal ITAT Hyderabad, in the cited judgment, addressed multiple issues related to the admissibility of appeals before the CIT(A) under Section 249(4) of the IT Act, the classification of income under the normal provisions of the Income Tax Act, and the treatment of gains from the transfer of capital assets. The Tribunal provided detailed analyses for each issue, highlighting legal requirements, precedents, and directions for re-adjudication by the CIT(A) to ensure a fair and lawful resolution of the appeals.