Case Law Details
Topworth Urja & Metal Limited Vs ACIT (ITAT Raipur)
M/s.Topworth Urja & Metals Limited vs. ACIT, CC-2 IT(SS)A.No.44 & 29/RPR/2018 (Date of Order : 27.05.2022) relating to dismissal of appeal in limine on account of non payment of taxes & non filing of returns u/s.153A. Appeal restored to file of CIT(A) in view of proviso to section 249(4)(b) to exercise the discretion vested in him & to consider the plea taken by appellant as regards financial difficulties.
On a perusal of the Section 249(4) of Income Tax Act, 1961, we find that the same contemplates the pre-conditions for admission of an appeal filed before the CIT(Appeals) in two different circumstances, viz. (a) in a case where return has been filed by the assessee; and (b) in a case where no return has been filed by the assessee. In so far a case where a return of income had been filed by the assessee is concerned, the taxes on the returned income is mandatorily required to have been paid by the assessee at the time of filing of the appeal before the CIT(Appeals), failing which the appeal would not be maintainable. On the other hand, though the legislature in all its wisdom had cast a similar statutory obligation on an assessee who had not filed his return of income, therein, making it obligatory for him to pay an amount equal to the amount of advance tax which was payable by him, but carves out an exemption from operation of the aforesaid statutory requirement by way of a “proviso” to section 249(4) of the Act, as per which on an application filed by the assessee before the CIT(Appeals), the latter may for good and sufficient reasons to be recorded in writing exempt him from the obligation of payment of taxes as therein contemplated. At this stage, we may herein observe, that the exemption envisaged in the “proviso” to section 249(4) of the Act can only be made available to an assessee whose case falls within the realm of clause (b) and cannot be applied to a case covered by clause (a) of Sec. 249(4) of the Act.
In the backdrop of the aforesaid position of law, we shall now deal with the sustainability of the order of the CIT(Appeals) who had declined the admission of the appeal of the assessee, for the reason that it had not paid the taxes which is a pre-condition for maintainability of an appeal as per Sec. 249(4) of the Act. At this stage, we may herein observe, that admittedly as the assesee company had not filed its return of income either u/s. 139 or u/s. 153A of the Act, therefore, its case would fall within the scope and gamut of clause (b) of section 249(4) of the Act. On a perusal of the orders of the lower authorities, it transpires, that the assessee had claimed before the CIT(Appeals) that owing to its financial difficulties taxes could not be paid even till the time of filing of the appeal before him. However, we find that the CIT(Appeals) losing sight of the fact that the instant case of the assessee was covered by clause (b) of Section 249(4) of the Act, which did vest a discretion with him to exempt the assessee for good and sufficient reasons to be recorded in writing from the pre-condition of payment of tax and admit the appeal, had however, without exercising his discretion in the backdrop of the reason given by the assessee dismissed its appeal in limine, for the reason that it had not filed its return of income and paid taxes. In our considered view, as stated by the Ld. AR, and rightly so, the CIT(Appeals) in the present case had failed to exercise the judicial discretion that was vested with him for exempting the assessee from the operation of the provisions of clause (b), despite there being a categorical claim of the assessee that the failure on its part to deposit the tax had occasioned on account of financial difficulties. Our aforesaid conviction that the CIT(Appeals) was under an obligation to have exercised his discretion within the meaning of the “proviso” to Section 249(4) of the Act is fortified by the judgment of the Hon’ble High Court of Madhya Pradesh in the case of Shyam Electric Works Vs. CIT, (2006) 284 ITR 413 (MP). In the aforesaid case the tribunal had allowed the appeal of the revenue, for the reason, that as the assessee had failed to pay the taxes as contemplated under Sec. 249(4) of the Act, therefore, its appeal was not maintainable before the CIT(Appeals). On appeal, the Hon’ble High Court while setting aside the order of the Tribunal, observed, that the tribunal instead of allowing the revenue’s appeal should have remanded the matter to the file of the CIT(Appeals) for granting an opportunity to the assessee to make an application as required under the “Proviso” to Section 249(4) of the Act, which provides for exemption from payment of taxes.
Considering the aforesaid facts involved in the present appeal a/w the aforesaid position of law, we are unable to persuade ourselves to subscribe to the dismissal of the assessee’s appeal in limine by the CIT(Appeals), who in our considered view had misconceived; or in fact had misconstrued the scope and gamut of the provisions of Section 249(4)(b) of the Act as were applicable to the case of the assessee before us. We, thus, in terms of our aforesaid observations, set-aside the impugned order of the CIT(Appeals) and restore the matter to his file with a direction to reconsider the maintainability of the appeal on the basis of reasons given by the assessee as regards the failure on its part to pay the amount of tax as contemplated in clause (b) of Sec. 249(4) of the Act. Accordingly, the Grounds of appeal No.(s) (i) to (iii) raised by the assessee are allowed for statistical purposes in terms of our aforesaid observations.
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