1998 (7) TMI 118 - AT - Wealth-tax

Summary

Issues Involved:
1. Non-admission of appeals due to non-payment of admitted tax before the presentation of the appeal.
2. Interpretation and application of Section 23(2A) of the Wealth Tax Act.
3. Financial hardship as a ground for condonation of delay in tax payment.
4. Judicial discretion in admitting appeals despite procedural lapses.

Detailed Analysis:

1. Non-admission of Appeals Due to Non-payment of Admitted Tax:
The primary issue was that the Commissioner of Wealth Tax (Appeals) [CWT(A)] did not admit the appeals because the assessee failed to pay the admitted tax before presenting the appeals. The assessee argued that the appeals should be admitted as the tax was paid before the hearing. The Tribunal noted that the assessee had shown sufficient reasons for the delay in tax payment, including financial difficulties, and had paid the tax before any effective hearing took place.

2. Interpretation and Application of Section 23(2A) of the Wealth Tax Act:
The assessee contended that under Section 23(2A) of the Wealth Tax Act, the appeal should be admitted upon payment of the tax due on the net wealth returned by the appellant. The Tribunal agreed with the assessee, citing the judgment of the Hon'ble Supreme Court in the case of CIT v. Filmistan Ltd. [1961] 42 ITR 163, which stated that an appeal cannot be held incompetent merely because the tax was not paid within the prescribed time. The appeal is deemed filed on the day the tax is paid, and its admissibility depends on the sufficiency of the cause for the delay.

3. Financial Hardship as a Ground for Condonation of Delay in Tax Payment:
The assessee argued that due to severe financial difficulties, the admitted tax could not be paid before filing the appeals. The Tribunal acknowledged the financial hardships faced by the assessee, including the financial crisis of the company where the assessee was a Managing Director. The Tribunal found the reasons for the delay in tax payment to be genuine and supported by evidence, such as the negative wealth assessed in subsequent years and the financial position of the assessee's company.

4. Judicial Discretion in Admitting Appeals Despite Procedural Lapses:
The Tribunal emphasized the importance of judicial discretion in admitting appeals despite procedural lapses. It referred to several judgments, including Lalta Prasad Khinnilal v. A.C (Judl) Sales Tax [1972] 4 SCC 505, which stated that an appeal becomes entertainable on the day the admitted tax is paid, and the delay can be condoned if there is sufficient cause. The Tribunal concluded that the CWT(A) should have exercised judicial discretion to admit the appeals, considering the financial difficulties and the eventual payment of the admitted tax.

Conclusion:
The Tribunal allowed the appeals, condoning the delay in tax payment, and directed the CWT(A) to admit the appeals for hearing and decide them on merits. The Tribunal highlighted that the right to appeal is a statutory right and should be exercised with due consideration of all circumstances, including financial hardships. The appeals were accepted, and the CWT(A) was instructed to provide the assessee with an opportunity to be heard and to decide the appeals on their merits.