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TMI Blog2010 (10) TMI 752X X X X Extracts X X X X X X X X Extracts X X X X ..... yment made by the assessee at Rs. 7.50 lakhs on 8-6-2010 to be adjusted towards admitted tax liability for the assessment year 2007-08. Being so, in all fairness, the assessee cannot be penalized by not admitting its appeal for adjudication by the CIT(A). - IT Appeal No. 1070 (HYD.) of 2010, SA. No. 58/Hyd - - - Dated:- 8-10-2010 - G.C. Gupta, Chandra Poojari, JJ. P. Murali Mohan Rao for the Appellant. Smt. Vasundhara Sinha for the Respondent. ORDER Chandra Poojari, Accountant Member. This appeal preferred by the assessee directed against the order of the CIT(A)-III, Hyderabad dated 30-7-2010 and pertains to the assessment year 2007-08. The assessee also filed Stay Petition seeking the Stay of the outstanding disputed demand of Rs. 10,055.76 lakhs for these assessment years. 2. The assessee raised the ground in its appeal with regard to non-admitting of its appeal by the CIT(A) on the reason that the assessee has not paid the admitted tax liability on the return of income as provided under section 249(3) of the Income-tax Act, 1961 without deciding the appeal on merit. 3. Brief facts of the case are that the assessee has not paid the admitted tax lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment for the assessment year 2007-08 order framed under section 144 of the Act issued raising an exorbitant amount of demand of Rs. 100,55,76,506 received the same on 24-12-2009. He submitted that the demand is phenomenally exorbitant figure and was challenged the same before the CIT(A) because of the burden of the payment which is highly detrimental to the interest of the company. (iv) That the available funds were adjusted towards the tax demanded under notice of section 226(3) of IT Act, 1961 and once again the payments made afresh on 31-3-2010 and 8-6-2010 towards the liability of demand of assessment year 2007-08 and requested to consider the appeal afresh and to condone the delay in filing the fresh filing of the appeal the delay of 24-1-2010 to 8-6-2010 explaining the reasons. (v) That the reasons for the delay in payment of taxes are the bank accounts were under attachment and added to this bad market conditions further aggravated the problem. The tax credit available on record was not given in time and the excess demand erroneously recovered from the bank account on 4-2-2010 has further lead to cash crunch but managed to pay the demand. He submitted that the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on merit by condoning the delay in filing the appeal. He submitted that the assessee has already attended the hearing proceedings at various dates for five times and furnished the information called for. Hence the assessment order passed under section 144 itself is void ab initio. In view of the above the assessment order in respect of the assessee may be set aside for doing the assessment afresh after giving an opportunity to the assessee. The learned authorised representative further relied on the case laws given below wherein it has been held that before passing the order under the provisions of section 144 the conditions precedent for making best judgment assessment has to be fulfilled before passing the assessment order under the provisions of section 144 of the IT Act. (a) Mubarak Trading Co. v. CIT [2008] 174 Taxman 339 (Ker.) (b) Madnani Construction Corpn. (P.) Ltd. v. CIT [2008] 296 ITR 45 (Guj.) (c) Mohini Debi Malpani v. ITO [1970] 77 ITR 674 (Cal.) (d) C.O. Devassy v. State of Kerala [1991] 81 STC 2 (Ker.) (e) J.M. Sheth v. CIT [1965] 56 ITR 293 (Mad.) (f) State of Orissa v. Maharaja Shri B.P. Singh Deo [1970] 76 ITR 690 (SC) (g) CIT v. Raniche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o this section would be defeated if returned income on the basis of good and sufficient reasons for not making the payment. Therefore, these provisions must be interpreted in consonance with the aims and objects of the Legislature in enacting the provisions for further the objects and not to defeat them. The requirement of section 249(4) regarding payment of tax on income returned, etc. cannot be said merely to regulate the exercise of the assessee s pre-existing right of appeal but in truth whittles down the right itself and cannot be regarded as mere rule of procedure. The provisions of section 249(4) are substantive provisions. Therefore in order to get his appeal admitted by the first appellate authority, the assessee must comply whether these have application as to the payment of tax due on the returned income before the expiry of the period of limitation of filing the appeal. On failure of the assessee to comply with the requirement the first appellate authority is competent not to admit the appeal. She relied on the judgment of Punjab Haryana High Court in the case of Shergarh Co.op. L C Society Ltd. v. ITO [2010] 324 ITR 4083 wherein it was held that: Wherever the Leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee on 26-5-2010 the assessee not paid the admitted tax. Further CIT(A) informed the assessee non-payment of admitted tax vide letter dated 17-6-2010. According to DR, the assessee not made any payment towards the admitted income-tax liability on the returned income before filing the return for the assessment year 2007-08. The refund arose through modification order passed under section 154 on 25-6-2010 cannot be considered as due payment of admitted tax as on date of filing the appeal before CIT(A) on 19-1-2010. According to her, the admitted tax has not been paid. 11. We have heard both the parties and perused the materials available on record. The main plea of the assessee s counsel is that there was a huge refund due to the assessee relating to the earlier assessment years 2004-05 and 2005-06. This was accepted by the department vide their modification order dated 25-6-2010 as per which there was a refund due to the assessee at Rs. 58,270 and Rs. 7,22,274 for the assessment years 2004-05 and 2005-06 respectively. This is on account of payment of tax on 31-10-2005 at Rs. 6,69,193 and Rs. 10,568 on 31-3-2006 which was unadjusted till passing of modification order. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prepare an appeal. When there is an excess payment of tax by assessee and assessee is entitled for a refund and the balance is pending with the department to refund to the assessee and further there was attachment bank account of the assessee, to make further payment if required towards admitted tax liability, the right guaranteed to the assessee to prefer an appeal cannot be deprived by taking the view that the assessee failed to pay the tax due on income shown in the return of income filed by assessee on 19-2-2008. Under these circumstances, the CIT(A) required to consider the refund due to the assessee and amount attached by the department at Rs. 30,34,965 on 19-11-2009 and payment made by the assessee at Rs. 7.50 lakhs on 8-6-2010 to be adjusted towards admitted tax liability for the assessment year 2007-08. Being so, in all fairness, the assessee cannot be penalized by not admitting its appeal for adjudication by the CIT(A). The order rejecting the appeal by CIT(A) is unsustainable in law and the matter required to be considered on merit of the issues raised by the assessee at the end of the CIT(A). Accordingly, we set aside the appeal to the file of the CIT(A) to admit the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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