KILARI SATYANARAYANA,SRIKAKULAM vs. THE INCOME TAX OFFICER, WARD-1, , SRIKAKULAM

In this case, the Assessee has challenged the assessment order before the ld. Commissioner and filed some additional evidence, which were referred by the ld. Commissioner to the AO and the remand report was called for, in response to which, the AO submitted the remand report on dated 10/10/2019 wherein it was stated that “it is to submit that as per ITD software, the appellant has not paid 20% of tax on disputed demand”. On the basis of this fact, the ld. Commissioner dismissed the appeal of the Assessee by observing that “as the appellant has not paid 20% of the tax on disputed demand, the appeal is dismissed on technical grounds”.

During the course of hearing, ld. AR drawn our attention to Form No. 26AS wherein at serial No.4, an amount of Rs.1,29,918/- appears to be deposited on 15/03/2018 as against the total outstanding demand of Rs. 6,49,590/- and the ld. AR submitted that the Assessee though has already deposited more than 20% of the disputed demand, however, reason best known to the AO, he submitted before the ld. Commissioner that the appellant has not paid 20% of the tax on disputed demand and the Ld. Commissioner while relying upon that particular statement, wrongly dismissed the appeal of the assess in limine, whereas the deposit of 20% of tax on disputed demand is not necessary for filing an appeal before the ld. Commissioner.

Ld. DR supported the orders of the authorities below. 5. Having heard the parties and perused the material available on record. According to the CBDT Circular F.No. 404/72/93-ITCC, dated 31/07/2017 it is mandated that the AO shall grant stay of demand till disposal of first appeal on payment of 20% of the disputed demand, unless the case falls in the category discussed in para (B) of the circular. Though the Assessee has already deposited Rs.1,29,918/- on dated 15/03/2018 at his own wish, however it is not the case of the Revenue that the Assessee has sought an stay of the disputed demand and stay was granted subject to the payment of 20% of the disputed amount, however the Assessee did not deposit the same. There is nothing in our knowledge and even otherwise nothing material and/or law has been brought and cited before us that the deposit of 20% of the disputed amount is pre-requisite for filing of appeal before the ld. Commissioner.

From the facts emerged, it appears that both the authorities below misconstrued the CBDT Circular dated 31/07/2017 (supra) and assumed that for filing of appeal before the ld. Commissioner deposit of 20% of the disputed amount is mandatory, whereas in real fact said deposit is only applicable in a case, where the Assessee seeks stay of demand till disposal of the first appeal. The ld. Commissioner dismissed the appeal of the Assessee in limine on technical grounds as referred above and not decided the same on merits, hence, we are inclined to set aside the order of the ld. Commissioner and to remand the case back to the file of the ld. Commissioner for decision afresh on merits, suffice to say while affording reasonable opportunity of being heard to the Assessee.

In the result, appeal filed by the Assessee stands allowed for statistical purpose. Order Pronounced in open Court on this 06th day of April, 2021.