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2005 (3) TMI 52 - HC - Income TaxAppeal to Commissioner - 1. Whether, Tribunal was right in holding that the order of CIT (A) is bad because no application for exemption from operation of the proviso to section 249(4) was filed before CIT (A)and the CIT (A) has not expressly passed an order exempting the assessee from payment of tax? 2. Whether, the CIT (A) would impliedly be-deemed to have exercised his powers under the proviso to section 249(4) and exempting the assessee from payment of tax, when he proceeded to dispose of the appeal on the merits? 3. Whether the Tribunal is correct in relying upon the decision under the proviso to section 30 of the Indian Income-tax Act, 1922 in the instant case, when there is a material difference between the relevant provisions in section 30 of the 1922 Act and section 249(4) of the Income-tax Act, 1961? 4. Whether Tribunal is correct in not remanding the case to the CIT (A) to deal with the appeal before him in accordance with law? 5. Whether ITAT was justified in observing that Even otherwise, there is no substance in the contention of the assessee that the assessment should have been cancelled by the CIT (A), when it held that the appeal before the CIT (A)was incompetent? - Wwe answer questions Nos. 1, 2 and 3 in favour of the Commissioner of Income-tax and against the assessee and answer questions Nos. 4 and 5 in favour of the assessee
Issues:
1. Interpretation of section 249(4) of the Income-tax Act, 1961 regarding payment of tax for admission of appeal. 2. Jurisdiction of Commissioner of Income-tax (Appeals) in entertaining appeals without compliance with section 249(4). 3. Application of relevant provisions from the Indian Income-tax Act, 1922 in the current case. 4. Requirement of remand by the Tribunal to the Commissioner of Income-tax (Appeals) for compliance with law. 5. Competency of the appeal before the Commissioner of Income-tax (Appeals) and subsequent observations by the Income-tax Appellate Tribunal (ITAT). Analysis: The judgment concerns an income-tax reference made by the Tribunal at the instance of the assessee under section 256(1) of the Income-tax Act, 1961. The primary issue revolves around the interpretation of section 249(4) of the Act, which mandates the payment of tax for the admission of an appeal. The Tribunal held that failure to comply with this requirement renders the appeal not maintainable. However, the High Court emphasized the mandatory nature of compliance with section 249(4) before entertaining an appeal, underscoring that the jurisdiction of the Commissioner of Income-tax (Appeals) hinges on strict adherence to these requirements. The judgment delves into the discretion vested in the Commissioner of Income-tax (Appeals) by the proviso to sub-section (4) of section 249, allowing for exemption from payment of tax under certain circumstances. The High Court highlighted that the right to seek exemption from tax payment is a statutory one that cannot be arbitrarily denied. The Court stressed that if an appellant fails to deposit the tax as required by the provision, the appeal must be dismissed as not maintainable unless an application for exemption is made and decided upon by the Commissioner of Income-tax (Appeals). Furthermore, the Court addressed the Tribunal's failure to remand the case to the Commissioner of Income-tax (Appeals) for compliance with the law. It emphasized that if an appeal is found to be non-compliant with section 249(4), the Tribunal should grant the appellant an opportunity to rectify the deficiency by making the necessary application for exemption from tax payment. The High Court concluded by ruling in favor of the assessee on questions related to the remand requirement and the competency of the appeal, while upholding the Commissioner of Income-tax on issues concerning the interpretation and application of section 249(4) and the relevant provisions from the Indian Income-tax Act, 1922. In summary, the judgment underscores the significance of strict compliance with statutory provisions governing the payment of tax for the admission of appeals, the jurisdiction of the Commissioner of Income-tax (Appeals), and the procedural aspects of seeking exemption from tax payment in income tax matters.
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