2023 (5) TMI 1374 - AT - Income Tax

Dismissal of appeal on Non-payment of the self-assessment tax - assessee made full payment of tax due on return income - HELD THAT - The provisions of section 249(4)(a) of the Act set out the condition that no appeal shall be admitted unless, at the time of filing the appeal, the assessee has paid the tax due on the income that return by him. Thus, it is clear that there is no limitation prescribed for payment of the tax but it is required to be paid at the time of filing the appeal and consequently the delay in payment of the due tax on the return income can be at the most considered as delay in filing the appeal. Non-payment of tax due on return income would amount a defect in appeal and not avoid appeal. Thus, we are of the considered view that once the assessee made full payment of tax due on return income, the appeals of the assessee ought to have been decided on merits instead of dismissed the same in limine.

Summary

Issues Involved:
1. Non-admissibility of appeal due to non-payment of self-assessment tax at the time of filing.
2. Non-appreciation of judicial pronouncements regarding subsequent payment of admitted tax.

Issue-wise Detailed Analysis:

1. Non-admissibility of appeal due to non-payment of self-assessment tax at the time of filing:
The assessee's appeals were dismissed by the Commissioner of Income Tax (Appeals) (CIT(A)) due to non-payment of self-assessment tax at the time of filing, as required by Section 249(4)(a) of the Income Tax Act. The assessee contended that the tax was subsequently paid during the pendency of the appeal due to financial crises and business closure. The Bangalore Bench of the Tribunal in the case of M/s. Fiza Developers & Inter Trade P. Ltd. held that once the admitted tax is fully paid, the appeal should be decided on merits rather than dismissed in limine. The Tribunal emphasized that non-compliance with Section 249(4)(a) results in a defect in the appeal, not a void appeal, and subsequent payment of tax validates the appeal. The Tribunal also referenced the Hon'ble Supreme Court's decision in CIT vs. Filmistan Ltd., which clarified that an appeal is not properly filed until the tax is paid, but once paid, the appeal should proceed on merits.

2. Non-appreciation of judicial pronouncements regarding subsequent payment of admitted tax:
The assessee argued that various High Court and Apex Court decisions support the admission of appeals if the admitted tax is paid subsequently. The Tribunal cited the Karnataka High Court's rulings in CIT v. K. Satish Kumar Singh and Principal CIT v. Abdul Ahid M, which held that appeals should be admitted and adjudicated on merits if the admitted tax is paid at any point before the appeal is disposed of. The Tribunal also referred to the Mumbai ITAT's decision in Bhumiraj Constructions vs. ACIT, which distinguished between mandatory and directory provisions, concluding that the requirement to pay tax before filing an appeal is directory, not mandatory. Therefore, if the tax is paid later, the appeal should be considered valid and heard on merits.

Conclusion:
The Tribunal concluded that the non-payment of tax at the time of filing the appeal constituted a defect, not a void appeal. Once the tax was paid, the appeal should be admitted and decided on merits. For the assessment year 2011-12, the Tribunal noted that the CIT(A) should verify the refund from the CPC portal before proceeding. Consequently, the Tribunal set aside the CIT(A)'s orders and remanded the appeals for adjudication on merits, ensuring the assessee is given an appropriate opportunity of hearing.

Judgment:
The appeals of the assessee were allowed for statistical purposes, and the cases were remanded to the CIT(A) for a decision on merits after verifying the payment of taxes and providing a hearing opportunity to the assessee.