1995 (11) TMI 115 - AT - Income Tax

Summary

Issues:
1. Maintainability of the appeal before the First Appellate Authority due to non-payment of tax on the returned income.
2. Interpretation of section 249(4)(a) of the Income-tax Act regarding the payment of tax before filing an appeal.
3. Application of the judgment of the Calcutta High Court in CIT v. Bengal Card Board Industries & Printers (P.) Ltd to the present case.

Detailed Analysis:
1. The main issue in this case was the maintainability of the appeal before the First Appellate Authority due to the non-payment of tax on the returned income by the assessee. The CIT(A) declined to entertain the appeal citing section 249(4)(a) of the Income-tax Act, which mandates that no appeal shall be admitted unless the tax due on the returned income has been paid at the time of filing the appeal. The CIT(A) held that he did not have the power to condone the non-payment of tax as per the statutory provision, emphasizing the strict interpretation of taxing statutes.

2. Section 249(4)(a) of the Income-tax Act, effective from 1-4-1989, requires the assessee to pay the tax due on the income returned before filing an appeal. The Tribunal noted that the assessee had not paid the tax on the returned income, nor any advance tax or self-assessment tax before filing the appeal. The purpose of this provision is to ensure tax compliance and discourage assessees from withholding tax while filing appeals. The Tribunal emphasized that the CIT(A) must function within the parameters of the statute and does not have inherent powers to entertain appeals if the statutory requirements are not met.

3. The assessee relied on the judgment of the Calcutta High Court in CIT v. Bengal Card Board Industries & Printers (P.) Ltd, arguing that the right to appeal should be governed by the law as it stood when the assessment proceedings were initiated. However, the Tribunal distinguished the facts of the present case from the Calcutta High Court judgment, pointing out that the assessment proceedings in this case started after the amendment to section 249(4)(a) came into effect on 1-4-1989. The Tribunal rejected the contention that the assessment proceedings started with the search at the assessee's premises in 1987, emphasizing that such an interpretation would lead to an absurd result not intended by the Legislature.

In conclusion, the Tribunal dismissed the appeal, upholding the decision of the CIT(A) regarding the non-maintainability of the appeal due to the non-payment of tax on the returned income as required by section 249(4)(a) of the Income-tax Act.