1979 (11) TMI 149 - AT - Income Tax

Summary

Issues:
1. Refusal to admit the appeal by CIT(A) for non-payment of tax at the time of filing the appeal.

Analysis:
The judgment revolves around the issue of whether the CIT(A) was justified in refusing to admit the appeal filed by the assessee due to non-payment of tax at the time of filing the appeal. The relevant assessment was for the assessment year 1975-76, completed on 25th Feb., 1978, with a demand notice served on 11th March, 1978, for payment of tax amounting to Rs. 24,629. The assessee applied to the ITO under s. 220(3) on 27th March, 1978, requesting a stay on the tax collection pending appeal, which was filed on 7th April, 1978. The ITO directed the payment of Rs. 13,118 immediately, and the assessee complied by 22nd July, 1978. The CIT (A) refused to admit the appeal citing non-payment of tax at the time of filing. The main contention was whether there was a valid reason for the non-payment of tax by the assessee.

The legal representative of the assessee argued that at the time of filing the appeal, the application to the ITO for stay of tax collection was pending, and the assessee believed it would be granted. By the time the CIT (A) issued a show-cause notice on 21st Sept., 1978, the admitted tax was paid, removing any legal impediment to admitting the appeal. The Revenue's representative, however, supported the CIT (A)'s decision, citing precedents and legal provisions requiring tax payment at the time of appeal filing.

The Tribunal analyzed the provisions of the Income Tax Act, 1961, specifically s. 249(4), which mandates tax payment at the time of appeal filing unless exempted for good and sufficient reasons. The Tribunal noted that the assessee had paid the tax before the CIT (A) heard the appeal, indicating a valid reason for non-payment at the time of filing. The Tribunal disagreed with the CIT (A)'s decision, emphasizing the assessee's compliance with tax payment requirements before the appeal hearing. The judgment directed the CIT (A) to admit the appeal for further proceedings on merits and in accordance with the law.

In conclusion, the judgment addressed the issue of non-payment of tax at the time of filing an appeal and emphasized the importance of valid reasons for such non-compliance. The Tribunal found in favor of the assessee, holding that the tax payment before the appeal hearing constituted a good and sufficient reason for exempting the assessee from the tax payment requirement at the time of filing the appeal.