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Issues: Appeal against assessment order for non-compliance with tax payment provision under IT Act, 1961.
Analysis: 1. The assessee filed an appeal against the assessment order for the assessment year 1975-76, where the tax payable was Rs. 1,04,774 on the returned income of Rs. 1,42,070. The appeal was dismissed by the CIT (Appeals) for not complying with the tax payment provision of sub-section (4) of section 249 of the IT Act, 1961. 2. The assessee argued that there were valid reasons for not paying the tax, citing the seizure of 2432 kgs of silver by the ITO under section 132 of the Act. Out of this, 1932 kgs were released to the assessee, and the remaining 500 kgs were still with the Department. The released silver was sold to pay the tax. The assessee requested the release of the remaining silver or to consider the tax paid in view of the silver still held by the Department. The assessee's other properties were under proceedings of the Smugglers and Foreign Exchange Manipulators Act, making it impossible to convert them into cash for tax payment. 3. The ITO argued that the assessee had substantial agricultural income and other assets that could have been used to pay the tax. The CIT (Appeals) concurred, stating that there were other sources of income available to the assessee, and the eight-month gap between filing the return and the appeal could have been utilized to pay the tax. The CIT (Appeals) rejected the appeal for non-compliance with the tax payment provision. 4. The appellate tribunal noted that the only income source pointed out by the CIT (Appeals) was the agricultural income, which was forfeited under the Smugglers and Foreign Exchange Manipulators Act. The tribunal also considered the frozen bank deposit and sundry debts, concluding that these amounts could not have been converted into cash for tax payment. 5. Considering all circumstances, the tribunal found that the assessee was unable to pay the tax at the time of filing the appeal. It held that there were valid reasons for exempting the assessee from the tax payment provision and directed the appeal to be disposed of on merits after giving the assessee a fair hearing. 6. Consequently, the appeal was allowed, overturning the CIT (Appeals) decision and granting relief to the assessee.
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