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TMI Blog2015 (7) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... nature. According to the Tribunal, where such defect in appeal, being non-payment of tax prior to filing of appeal, has been removed then the earlier filed defective appeal becomes a valid appeal. Notably, the Tribunal has also referred to the Judgment of Hon’ble Karnataka High Court in the case of D. Komalakshi V. DCIT [2006 (11) TMI 155 - KARNATAKA High Court ] in holding that on removal of defect, the earlier defective appeal becomes valid. Applying the similar parity of reasoning to the facts of the instant case, we find that herein the assessee made good the defect of nonpayment of tax due on the income returned before the CIT(A) passed the impugned order. Therefore, in our view, the CIT(A) ought not to have dismissed the appeal as un-admitted by invoking the provisions of section 249(4) of the Act, and instead the removal of defect by the assessee should have been recognized and the appeal filed by the assessee should have been determined on its merits. Therefore, in the facts and circumstances of the case, we hereby set aside the order of CIT(A) and restore the appeal back to his file for adjudication afresh on merits. - Decided in favour of assessee. - ITA NO.1443/Mum/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayments starting from 28.12.2009 to 25.11.2010 in eight instalments totalling to ₹ 8,25,000/-. It was pointed out that up to 25.11.2010, assessee had paid total tax of ₹ 9,85,000/-, which was more than the tax due on the returned income. In this background, the Ld. Representative submitted that the CIT(A) erred in dismissing the appeal of the assessee as un-admitted inasmuch as defect of non payment of taxes on returned income was rectified by the assessee even before the CIT(A) disposed of the appeal of the assessee. The Ld. Representative has relied upon the decision of Mumbai Bench of the Tribunal in the case of Bhumiraj Construction Vs. Addl. CIT [135 TTJ 357] (Mum.), to point out that the stipulation as to the deposit of such tax before filing of the appeal is only directory and not mandatory. Further, as per the Tribunal, where such tax has been paid even subsequent to the filing of appeal then the same mitigates the rigors of section 249(4) of the Act, and accordingly, the appeal is liable to be admitted and adjudicated on merits by the CIT(A). The Ld. Representative emphasized that in the case of Bhumiraj Construction (supra), the assessee therein had paid the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Bhumiraj Construction (supra) is worthy of notice:- 4. At this stage, it will be fruitful to have a look at the provisions of section 249(4), under which section the impugned order has been passed. It runs as under: 249(4) No appeal under this Chapter shall be admitted unless at the time of filing of the appeal, ( a)where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or (b)where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him : Provided that, in a case falling under clause (b) and on an application made by the appellant in this behalf, the Commissioner (Appeals) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of that clause. 5. On going through the prescription of proviso to subsection (4) it transpires that the CIT(A) has been empowered to grant exemption from the payment of tax equal to the amount of advance tax which was payable by the assessee in a situation where no return is filed by the assessee. It implies that where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the auditors in connection with the grant of deductions under Chapter VIA as only directory and not mandatory. In such cases it has been held that even if the audit report was not filed along with the return of income as per the necessity of the relevant section, still the deduction could not be denied if such report was subsequently filed during the course of assessment proceedings. In a case where the assessee failed to submit audit report in support of claim for deduction under sections SOHH and SOJ during the course of assessment proceedings, the Hon'ble High Court in CIT Vs. Trehan Enterprises [2001] 24e ITR 333 /[2000] 108 Taxman 189 (J K) held that when such report was filed before the Id. CIT(A), it was necessary for him either to allow deduction or send the matter to the file of Assessing Officer for a fresh decision in the light of such report. It, therefore, transpires that noncompliance of directory requirement does not make the action as invalid. As soon as such requirement is fulfilled, the deficiency stands removed and the action is validated. It can also be seen from the mandate of section 139(9), dealing with the defective return, which provides that on the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age to make the payment of tax at a later date, The stipulation as to the payment of such tax ante the filing of first appeal is only directory and not mandatory. Whereas the payment of such tax is mandatory but the requirement of paying suchtax before filing appeal is only directory. When the defect in the appeal, being the non-payment of such tax, is removed, the earlier defective appeal becomes valid. Once we call an appeal as valid, it is implicit that it is not timebarred. It implies that all the consequences which follow on the removal of defect are that the validity is attached to the appeal from the date when it was originally filed and not when the defect is removed. 10. The Id. AR submitted that the assessee was facing the financial crunch which led to the non-payment of tax on the returned income at the time required by the Id. CIT(A). It was claimed that on making the payment of tax, the appeal ought to have been admitted by the Id. CIT (A). He relied on the order passed by the Mumbai Bench of the Tribunal in the case of Anant R. Thakore v. Asstt. CIT[2006] 5 SOT 298 in which it has been held that the CIT(A) was not justified in dismissing the appeal under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a clear judgment of the Hon'ble Karnataka High Court available on the point, relied on by the learned Departmental Representative on this issue. 12. Adverting to the facts of the instant case we find that the assessee paid the tax due on income returned albeit after the disposal of appeal by the Id. CIT(A). On such payment, the defect in the appeal due to noncompliance of a directory requirement of paying such tax before the filing of the appeal, stood removed. Ex consequenti this appeal should have been revived by the Id. first appellate authority. Under such circumstances we set aside the impugned order and restore the matter to the file of the learned CIT(A) for disposal of the appeal on merits. 9. Notably, the Tribunal has also referred to the Judgment of Hon ble Karnataka High Court in the case of D. Komalakshi V. DCIT [ 192 ITR 99] (Karnataka), in holding that on removal of defect, the earlier defective appeal becomes valid. Applying the similar parity of reasoning to the facts of the instant case, we find that herein the assessee made good the defect of nonpayment of tax due on the income returned before the CIT(A) passed the impugned order. Therefore, in our ..... X X X X Extracts X X X X X X X X Extracts X X X X
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