1993 (5) TMI 59 - AT - Income Tax

Summary

Issues Involved:
1. Refusal to grant exemption under section 249(4) of the Income-tax Act, 1961.
2. Financial position and liquidity of the assessee company.
3. Adjustments of refunds against tax payable under section 140A.
4. Compliance with mandatory provisions of section 249(4).

Issue-wise Detailed Analysis:

1. Refusal to grant exemption under section 249(4) of the Income-tax Act, 1961:

The assessee appealed against the order refusing to grant exemption under section 249(4) of the Income-tax Act, 1961, passed by the CIT(A)-IX, New Delhi for the assessment year 1984-85. The CIT(A) dismissed the appeal on the grounds that the tax due on the income returned by the assessee-company was not paid as required under section 249(4). The Tribunal remanded the matter back to the CIT(A) for reconsideration, allowing the assessee to submit an application for exemption from the provisions of section 249(4) for good and sufficient reasons. The CIT(A) again rejected the application, concluding that there was no good and sufficient reason for not making the payment of self-assessment tax.

2. Financial position and liquidity of the assessee company:

The assessee claimed that financial difficulties prevented it from paying the self-assessment tax on time. The CIT(A) examined the financial position of the assessee for the assessment year 1984-85 and observed substantial increases in purchases, sales, and profits. The assessee had also made additions by purchasing assets and maintained substantial bank balances. The CIT(A) concluded that the assessee was not in financial difficulty to make the payment of tax of Rs. 8,43,721 and dismissed the claim of financial exigency.

3. Adjustments of refunds against tax payable under section 140A:

The assessee argued that there was no tax liability due at the time of filing the appeal before the CIT(A) because it was entitled to refunds equivalent to or more than the tax alleged to be due under section 140A. However, the CIT(A) found that there was no specific request from the directors to adjust the refunds against the self-assessment tax payable under section 140A. The Tribunal agreed with the CIT(A) that in the absence of a specific request, it could not be assumed that the refunds were to be adjusted against the self-assessment tax.

4. Compliance with mandatory provisions of section 249(4):

The Tribunal emphasized that the provisions of section 249(4) are mandatory. The assessee must either comply with the requirement of paying the tax on the returned income before the period of limitation for filing the appeal or make an application for exemption from the operation of the provision. The Tribunal noted that the assessee did not make any written application for exemption within the period of limitation for filing the return. The Tribunal concluded that the assessee did not have good and sufficient reasons for not making the payment of taxes at the time of filing the return and upheld the CIT(A)'s decision.

Conclusion:

The Tribunal dismissed the appeal, agreeing with the CIT(A) that the assessee had no good and sufficient reasons for not making the payment of self-assessment tax and did not comply with the mandatory provisions of section 249(4). The Tribunal also noted the non-cooperation of the assessee in the expeditious disposal of the matter.