2000 (10) TMI 193 - AT - Income Tax

Summary

Issues Involved:
1. Levy of penalty under section 271(1)(c) of the I.T. Act.
2. Compliance with section 249(4) regarding payment of tax before filing an appeal.
3. Applicability of the amended provisions of section 249(4) post 1-4-1989.
4. Tribunal's power to direct the Commissioner (A) to admit an appeal despite non-compliance with section 249(4).
5. Determination of the relevant date for the accrual of the right to appeal.

Detailed Analysis:

Levy of Penalty under Section 271(1)(c):
The assessee, deriving income as a chitty foreman and a partner in a firm, was penalized Rs. 66,500 for concealing income for the assessment year 1987-88. The penalty was imposed by the Assessing Officer on 31-8-1990. The assessee appealed against this penalty, citing financial difficulties as the reason for non-payment of tax on the admitted income before filing the appeal.

Compliance with Section 249(4) Regarding Payment of Tax:
The assessee contended that financial difficulties prevented the payment of tax on the admitted income before filing the appeal. The assessee had paid Rs. 1 lakh as advance tax on 8-8-1988 and later paid Rs. 1,35,564 on 1-6-1995. The Commissioner (A) rejected the appeal due to non-compliance with section 249(4), which mandates payment of tax on the admitted income before an appeal can be admitted.

Applicability of the Amended Provisions of Section 249(4) Post 1-4-1989:
The Commissioner (A) held that the material date was the date of filing the appeal, which was after 1-4-1989, thus necessitating compliance with the amended section 249(4). The assessee argued that the provisions existing prior to the amendment should apply, as the notice under section 148 was issued on 16-8-1988, before the amendment.

Tribunal's Power to Direct the Commissioner (A) to Admit an Appeal:
The Tribunal considered whether it had the inherent power to direct the Commissioner (A) to admit the appeal despite non-compliance with section 249(4). The Departmental Representative argued that the Tribunal could not override statutory requirements. The Tribunal agreed, stating it could not relax statutory requirements or direct the Commissioner (A) to ignore section 249(4).

Determination of the Relevant Date for the Accrual of the Right to Appeal:
The Tribunal examined judicial precedents to determine the relevant date for the accrual of the right to appeal. It held that the crucial date was the initiation of assessment proceedings, not the date of filing the appeal. The Supreme Court and various High Courts had established that the right of appeal accrues at the initiation of proceedings. In this case, the notice under section 148 was issued on 16-8-1988, making the unamended provisions of section 249(4) applicable.

Conclusion:
The Tribunal found that the Commissioner (A) erred in not considering the assessee's request for exemption from the operation of section 249(4) based on financial difficulties. The Tribunal directed the Commissioner (A) to admit the appeal and dispose of it on merits, considering the financial difficulty as a good and sufficient reason for exemption. The appeal was thus restored to the file of the Commissioner (A) for disposal on merits.

Result:
For statistical purposes, the appeal by the assessee is treated as allowed.