1998 (8) TMI 135 - AT - Income Tax

Summary

Issues Involved:
1. Maintainability of the appeal before the Tribunal under Section 253(1)(b) of the IT Act, 1961.
2. Applicability of Section 249(4) of the IT Act, 1961 to appeals filed before the Tribunal.
3. Requirement for payment of admitted tax on returned income for appeal admission.
4. Discretionary power of the Tribunal to exempt the appellant from the operation of Section 249(4).

Detailed Analysis:

1. Maintainability of the Appeal:
The primary issue was whether the appeal filed by the assessee before the Tribunal under Section 253(1)(b) of the IT Act, 1961, was maintainable given the non-payment of admitted tax on the returned undisclosed income of Rs. 18,04,100, amounting to Rs. 9,52,460. The Senior Departmental Representative argued that the appeal was not maintainable due to the non-payment of the admitted tax, invoking the provisions of Section 249(4) of the IT Act, 1961. The Tribunal agreed with this argument, stating that the appeal could not be admitted due to the non-compliance with the mandatory provisions of Section 249(4), which required the payment of tax on the returned income before filing the appeal.

2. Applicability of Section 249(4) to Tribunal Appeals:
The Tribunal examined whether Section 249(4), which mandates the payment of admitted tax on returned income for the admission of appeals, applies to appeals filed before the Tribunal under Section 253. The Tribunal concluded that the provisions of Section 249(4) are applicable to appeals before the Tribunal. The Tribunal emphasized that the language of Section 249(4) uses the word "Chapter" and not "Chapter XX-A," indicating that it applies to all appeals under Chapter XX, which includes appeals before the Tribunal. The Tribunal rejected the argument that Section 249(4) should only apply to appeals before the first appellate authorities (CIT(A) and Dy. CIT(A)).

3. Requirement for Payment of Admitted Tax:
The Tribunal highlighted that the right to appeal is a statutory right subject to conditions imposed by the legislature. In this case, the condition under Section 249(4) required the payment of tax on the admitted returned income for the appeal to be admitted. The Tribunal noted that the statutory forms for filing appeals (Form 35 for CIT(A) and Form 36 for the Tribunal) did not alter this requirement. The Tribunal referenced various Supreme Court judgments to support the view that statutory conditions for appeals must be fulfilled, and non-compliance results in the appeal being non-maintainable.

4. Discretionary Power of the Tribunal:
The Tribunal considered whether it had the discretionary power to exempt the appellant from the operation of Section 249(4) under the proviso to that section. The Tribunal noted that while the first appellate authorities (CIT(A) and Dy. CIT(A)) had such discretionary power, the Tribunal itself did not possess this authority. The Tribunal attempted to exercise discretion by suggesting the appellant pay the admitted tax to admit the appeal, but the appellant failed to do so, citing a lack of funds. The Tribunal concluded that it could not exempt the appellant from the mandatory requirement of Section 249(4) and thus could not admit the appeal.

Conclusion:
The Tribunal held that the appeal was not maintainable due to the non-payment of the admitted tax on the returned undisclosed income. The provisions of Section 249(4) were deemed applicable to appeals before the Tribunal, and the Tribunal did not have the discretionary power to exempt the appellant from this requirement. Consequently, the appeal was dismissed, and the interim stay granted earlier was vacated.