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TMI Blog2004 (10) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... , where the total income of the assessee, 'in the case to which the appeal relates' is more than Rs. 2 lakhs, the appeal to the Tribunal shall be accompanied by a filing fee of 1 per cent of the assessed income, subject to a maximum of Rs. 10,000. The Registry relied on this provision and calculated the filing fee at Rs. 3,412, being 1 per cent of the assessed income of Rs. 3,41,220. The assessee, however, paid only Rs. 500 as filing fee, apparently relying on clause (d) of the section which says that "where the subject-matter of an appeal relates to any matter, other than those specified in clauses (a), (b) and (c)". This clause was inserted by the Finance Act, 1999 with effect from 1-6-1999. As the Registry took the view that the filing fee was short paid by Rs. 2,912, a defect memo was issued to the assessee. The assessee did not pay the amount as demanded and, therefore, the matter was placed before the Division Bench. The assessee was given an opportunity of being heard in response to which it was contended that the proper filing fee is only Rs. 500 and reliance for this was placed on the order of Special Bench of the Tribunal (Three Members) in the case of Vinod Khatri v. Dy. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of cross-objections referred to in sub-section (4)." Clause (d) was inserted by the Finance Act, 1999 with effect from 1-6-1999. 5. The main contention advanced by Mr. R. Salarpuria, the learned representative for the assessee before the Special Bench, was that the words 'in the case to which the appeal relates', which appear in clauses (a) to (c) of the sub-section really mean and refer to an appeal before the Tribunal simplicitor, that the penalty is normally imposed on the concealed income and not on the assessed income and, therefore, these clauses do not apply where the appeal is filed against the levy of penalty. He submitted, relying on the observations of the Special Bench in Vinod Khatri's case in paragraph 17 of its order, that concealed income may not have a link with the assessed income and further that the penalty proceedings are wholly independent of assessment proceedings. Mr. Salarpuria further drew our attention to the expression 'tax sought to be evaded' appearing in Explanation 4 below section 271(1)(c) and pointed out that a concealment penalty is imposed only with reference to the tax sought to be evaded and has no connection with the income assessed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides the above Mr. Chakraborty relied on the majority judgment of the Special Bench in the case of Vinod Khatri. He also adopted generally the arguments of Mr. Salarpuria. 7. Mr. Subash Agarwal, the learned counsel appearing for the intervener Dr. Arti Chakraborty in ITA Nos. 72 and 75 also made submissions. He put forth the following points: The word 'relates' appearing in clause (d) was not a word of wide import as was held in the dissenting opinion expressed in the Special Bench in the case of Vinod Khatri that it is a word which merely connects the appeal and the penalty proceedings and that if there is any doubt as to the true meaning of the word, the same should be gathered from associated words as opined by the learned author G.P. Singh in page 379 of his treatise on the Principles of Statutory Interpretation, 8th Edition. No word can be substituted or added while interpreting a statutory provision. According to Mr. Agarwal, the flaw in the reasoning of the majority as pointed out in the dissenting opinion, namely that if clause (d) is interpreted in the manner done by the majority then it would mean that before introduction of the clause on 1-6-1999 there would have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as the rival contentions ably placed before us by both the sides. Section 253(6) as originally enacted was as under: "An appeal to the Tribunal shall be in the prescribed form and shall be verified in the prescribed manner and shall except in the case of an appeal referred to in sub-section (2) or a memorandum of cross-objections referred to in sub-section (4) be accompanied by a fee of one hundred rupees." Subsequently, the fee was enhanced to Rs. 125 by the Taxation Laws (Amendment) Act (1970) Finance Act, 1981 further enhanced the Court fee to Rs. 200 with effect from 1-6-1981. The basis for payment of the fee for filing appeals to the Tribunal was the date of initiation of assessment proceedings. Section 253(6), as it stood upto 31-5-1992, prior to its amendment by Finance Act, 1992, provided that the memorandum of appeal in Form No. 36 was to be accompanied by the specified amount of fee as under: "(a) In a case where the assessment proceedings were initiated before 1-4-1971, Rs. 100; (b) In a case where the assessment proceedings were initiated between 1-4-1971, and 31-5-1981 (both days inclusive), Rs. 125; (c) In any other case, Rs. 200." Between 1-6-1992 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided that no such fee shall be payable in the case of an appeal referred to in sub-section (2) or a memorandum of cross-objections referred to in sub-section(4)." With effect from 1-6-1999, anew clause, clause (d) was introduced by the Finance Act, 1999 which reads as under: "(d) where the subject-matter of an appeal relates to any matter, other than those specified in clauses (a), (b) and (c), five hundred rupees." The insertion of the above clause, which may be called hereinafter as the residuary clause was explained by Central Board of Direct Taxes Circular No. 779 dated 14-9-1999 in the following words: "(i) The Finance (No. 2) Act, 1998, introduced a scale of fees for filing appeals before the CIT(A) and also enhanced the existing scale of fee payable before the Tribunal under various Direct Tax Acts. The fee payable under the IT Act both before the CIT(A) and the Tribunal is relatable to the assessed income. However, appeals are also filed on issues such as TDS defaults, non-filing of returns, etc., which may not have any nexus with the assessed income. The Act, therefore, has amended section 249 of the IT Act to provide a fee of Rs. 250 for appeals before the CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent subject-matters. (e) The penalty levied is based on the tax sought to be evaded and not on the total income assessed by the Assessing Officer. Thus the penalty amount has no co-relation with the assessed income. (f) The Circular No. 779 itself clarifies that the residuary clause would cover the appeals on issues such as TDS defaults, non-filing of return etc. which may not have any nexus with the assessed income. The penalty levied, which does not have any nexus with the assessed income would thus fall under the residuary clause. 12. The minority opinion expressed in the above case was based on the following premises: (a) The expression 'in the appeal to which the case relates' appearing in clauses (a) to (c) is not limited in its import to merely the assessment order only. The expression has to be widely construed so as to include any appeal which is relatable to or connected with the total income computed by the Assessing Officer. (b) The word 'case' used in the above clauses in its technical or legal sense means cause or a state of facts which furnishes the occasion for the exercise of jurisdiction by a judicial Tribunal. (c) The word 'relates' used in all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of a penalty appeal is linked with the quantum of income assessed. In the light of this judgment the same interpretation should be placed on clauses (a) to (c). 13. Turning to the addition on clause (d), the residuary clause to the subsection by the Finance Act, 1999 with effect from 1-6-1999, the dissenting opinion has noted that this became necessary because there are certain penalties which are not linked to the assessed income, such as TDS defaults, failure to audit accounts etc. Nevertheless a filing fee with regard to these appeals had to be provided. This has been done by this residuary clause. It was further pointed out that the basis of levy of filing fee was changed even with effect from 1-6-1992 where it was linked with the assessed income and it was in 1999 that clause (d) was introduced to take care of the appeals filed against residuary cases namely cases of penalties or other orders which have nothing to do with the quantum of assessed income. The dissenting opinion made a pertinent point that if the expression 'case' as used in the section is to be read as the assessment order, then for the period prior to 1-6-1999 when clause (d) was introduced as the residuar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent orders, then they could have easily used a much simpler phraseology in clauses (a) to (c) as has been done in section 246 of the Act which provides for appeals to the Commissioner (Appeals). However, since the expression 'in the case to which the appeal relates' have been coined in clauses (a) to (c), it indicates a clear intention on the part of the Legislature to link the filing fee with the amount of income assessed by the Assessing Officer in cases of all appeals which have a relation with the amount of income assessed, including appeals against penalty for concealment. The residuary clause introduced w.e.f. 1-6-1999 takes care of all appeals, including appeals against certain penalties, which have no nexus with the amount of income assessed. We are also in agreement with the view expressed in the dissenting opinion to the effect that if the expression 'case' used in the sub-section is to be read as assessment order, then for the period prior to 1-6-1999, when clause (d) was inserted, no filing fee would be leviable in respect of appeals filed by the assessee against orders other than assessment orders, such as concealment penalty etc. Such an interpretation should obviousl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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